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
| Date | Details | $ | Date | Details | $ |
Explanation
Avinash
Suspense A/c
| Date | Details | $ | Date | Details | $ |
| 2018 Dec 31 | Purchases | 600 | 2018 Dec 31 | Difference in Trial balance | 7600 |
| Sales Returns | 3000 | Sales | 1000 | ||
| Purchases Returns | 3000 | Purchases | 1000 | ||
| Capital | 1500 | ||||
| Drawings | 1500 | ||||
| 9600 | 9600 |
- 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.