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JAMB Principles of Accounts 1995 Question 12

Question 12

Correction of Errors and Suspense Account

A payment of cash of ₦20 to John was entered on the receipt side of the cash book in error and credited to John's account. Which of the following journal entries can be used to correct the error?

  1. A.John: ₦40 Dr, cash: ₦40 Cr.
  2. B.Cash: ₦40 Dr, John: ₦40 Cr.
  3. C.John: ₦20 Dr, cash: ₦20 Cr.
  4. D.Cash: ₦20 Dr, John: ₦20 Cr.
Show the answer and explanation

Answer: A (John: ₦40 Dr, cash: ₦40 Cr.)

Explanation

Cash was debited ₦20 instead of credited ₦20, and John was credited instead of debited. To reverse the wrong entry and make the right one, debit John ₦40 and credit cash ₦40.