PRC-1 · Chapter 8 · Question 2 of 100
A credit purchase of Rs. 360 had been correctly entered into purchase day book but had been entered at Rs. 630 on the credit side of the supplier’s account in the purchase ledger (Payable ledgers). What journal entry must be recorded to correct this error?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) DEBIT: Supplier account Rs. 270 and CREDIT: Suspense Rs. 270
Explanation
The supplier's account was mistakenly credited with Rs. 630 instead of Rs. 360. To reduce the payable balance by the excess Rs. 270, the supplier account must be debited by Rs. 270, and the suspense account credited.
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