A-AS Level (CIE) Accounting Paper-1: Specimen Questions with Answers 49 - 49 of 93

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Question 49

Question

MCQ▾

Joan՚s trial balance sheet did not tally so Joan՚s opened a suspense account with a balance of $ 350 (Dr) .

He discovered the following:

1. The sales day book was understated by $ 9,000.

2. Purchases of amount $ 910 were only recorded in the payable՚s ledger control account.

3. Profit on sale of non-current assets was wrongly recorded as $ 840 instead of $ 800.

Choose the correct remaining balance on Joan՚s suspense account after correction of errors?

Choices

Choice (4)

a.

600

b.

9950

c.

10220

d.

6400

Answer

a.

Explanation

  • In option 1, the total sales of a day-book is posted in the receivables account so no adjustment is required in the suspense account. If there is error in the total it would affect both the sides of the account.
  • In option 2, There is one-sided entry so, it affects the suspense account. To correct this, the journal is debited with $ 910 which rectifies the original posting and credits the Suspense account $ 910
  • In option 3, There is an incorrect posting which also affects the suspense account. The journal entry on the disposal of an asset is to debited Cash with the proceeds, Cr Non-current assets to remove it from the accounts and Cr Profit.

If these journals are entered into the suspense account, the closing balance is .

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