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GCE Financial Accounting 1989 Question 9

Question 9

Correction of Errors and Suspense Account

A cheque for ₦400 drawn in favour of Jeje was posted to the credit of his account. The entry necessary to correct the error is

  1. A.a debit suspense account ₦800, credit Jeje's account ₦800
  2. B.debit bank account ₦400, credit Jeje's account ₦400
  3. C.debit suspense account ₦400, credit Jeje's account ₦400
  4. D.debit Jeje's account ₦800, credit suspense account ₦800
  5. E.debit Jeje's account ₦400, credit suspense account ₦400.
Show the answer and explanation

Answer: D (debit Jeje's account ₦800, credit suspense account ₦800)

Explanation

Jeje should have been debited ₦400 but was credited ₦400, so his account must be debited ₦800 (₦400 to cancel, ₦400 to post correctly), with suspense credited.