Theory question 108
Correction of Errors and Suspense AccountThe following trial balance was extracted from the books of Dushimar Ventures on 31st December, 2015. (DR / CR, Le)
Fixed Assets 72,200
Stock 13,800
Debtors 6,300
Creditors / 2,456
Bank overdrafts / 528
Provision for depreciation / 10,200
Sales / 102,320
Capital / 106,440
Purchases 72,308
Drawings 29,960
Sundry expenses 26,616
Provision for doubtful debts / 360
Suspense Account 1,120
Totals 222,304 / 222,304
The following errors were discovered: (i) The total sales day book for December 2015 had been overstated by Le 480; (ii) In January 2015, new office furniture was purchased for Le 14,400, this was debited to Purchases Account; (iii) A cheque payment of Le 864 to a supplier was entered in the book as Le 1,044; (iv) A credit note of Le 148 sent to a customer for returns was overlooked; (v) Payment of sundry expenses of Le 640 had been omitted from the trial balance.
You are required to prepare the: (a) Journal entries to correct the errors; (b) Suspense Account.
Show the model answer
(a) Journal (Le):
(i) Dr Sales 480; Cr Suspense 480.
(ii) Dr Office furniture (fixed assets) 14,400; Cr Purchases 14,400.
(iii) Dr Bank 180; Cr Creditor (supplier) 180 (payment overstated by 1,044 − 864 in both entries).
(iv) Dr Returns inwards 148; Cr Debtors (customer) 148.
(v) Dr Sundry expenses 640; Cr Suspense 640.
(b) Suspense Account: Dr balance per trial balance 1,120 | Cr sales 480; sundry expenses 640 = 1,120 (cleared).
Only errors that made the trial balance disagree pass through suspense.