IGCSE Accounting Paper-1: Specimen Questions with Answers 225 - 225 of 338

Passage

Avinash financial year ends on 31 December. On 31 December 2018, he prepared a trial balance and found an excess of $ 7600 on the debit side. The difference was credited to the Suspense A/c and later on the following errors were detected-

(I) Sale of Old furniture $ 1400 were credited to Sales A/c

(II) Purchases book was overcast by $ 600

(III) Goods returned to Anupam $ 3000 recorded in Sales Return Book, however Anupam՚s A/c was correctly debited

(IV) Bought goods from Aviral $ 1000 was recorded in Sales book.

However, the same was correctly posted to the credit of Aviral՚s A/c.

(V) Installation Cost of Plant $ 500 debited to Wages A/c

(VI) Capital introduced $ 1500 had been correctly entered in the cash book but debited in the drawings A/c

Question 225 (2 of 2 Based on Passage)

Write in Short

Short Answer▾

Prepare the Suspense A/c showing the opening balance and the (Marks 8)

Rectification entries for the errors.

Avinash

Suspense A/c

Prepare the Suspense a/C Showing the Opening Balance
DateDetails$DateDetails$

Explanation

Avinash

Suspense A/c

Prepare the Suspense a/C Showing the Opening Balance
DateDetails$DateDetails$
2018

Dec 31

Purchases6002018

Dec 31

Difference in Trial balance7600
Sales Returns3000Sales1000
Purchases Returns3000Purchases1000
Capital1500
Drawings1500
96009600
  • Error (II) To reduce excess debit of Purchases, Purchases A/c will be credited to the suspense A/c by the excess amount.
  • Error (III) Goods Returned to Anupam were recorded in Sales Return book, so Sales Return A/c will be credited by $ 3000 to nullify the previous debit entry. At the same time Purchases Return A/c will also be credited by the same amount to record the purchase return.
  • Error (IV) Purchases of $ 1000 was recorded in Sales book. So sales A/c will be debited by $ 1000 to nullify the previous credit entry. At the same time, Purchases A/c will also be debited by the same amount to record Purchases.
  • Error (VI) Capital A/c was to be debited by $ 1500 so, it will be debited. Drawings A/c was NOT to be debited but it was. So, drawings A/c will also be credited to set off the previous debit entry.

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