Theory question 105
Correction of Errors and Suspense AccountThe trial balance of Deba Duwe Enterprise failed to agree. The difference was entered in the suspense account. The following errors were later detected: (i) A sum of $1000 received from Salako has not been posted to his account; (ii) The sales day books was undercast by $560; (iii) Return outwards books was overcast by $140; (iv) Discount received, $410 from Damilola had been correctly entered in the cash book but not posted to Damilola's account; (v) Goods worth $750 returned to a supplier was recorded in his personal account as $570. (vi) Discount allowed was overcast by $310; (vii) Discount received column in the cash book has been overcast by $400.
You are required to prepare: (a) Journal entries to correct the errors; (b) Suspense Account.
Show the model answer
(a) Journal ($):
(i) Dr Suspense 1,000; Cr Salako 1,000 - receipt not posted to Salako's account.
(ii) Dr Suspense 560; Cr Sales 560 - sales day book undercast.
(iii) Dr Returns outwards 140; Cr Suspense 140 - returns outwards book overcast.
(iv) Dr Damilola 410; Cr Suspense 410 - discount received not posted to Damilola.
(v) Dr Supplier (creditor) 180; Cr Suspense 180 - returns of 750 recorded as 570.
(vi) Dr Suspense 310; Cr Discount allowed 310 - discount allowed overcast.
(vii) Dr Discount received 400; Cr Suspense 400 - discount received column overcast.
(b) Suspense Account ($): Dr - Salako 1,000; sales 560; discount allowed 310 = 1,870. Cr - difference in trial balance (opening balance) 740; returns outwards 140; Damilola 410; supplier 180; discount received 400 = 1,870.
The opening suspense balance is whatever makes the account close to nil.