Question 21
Correction of Errors and Suspense AccountThe total of the discount column of $60,000 on the credit side of a cash book was credited to the discount allowed account. To correct this error: debit
- A.Discount Allowed Account $60,000: credit Discount Received Account $60,000
- B.Discount Allowed Account $120,000: credit Discount Received Account $120,000
- C.Discount Received Account $60,000: credit Discount Allowed Account $60,000
- D.Discount Received Account $120,000: credit Discount Allowed Account $120,000
Show the answer and explanation
Answer: A (Discount Allowed Account $60,000: credit Discount Received Account $60,000)
Explanation
The credit-side discount is discount received; it should have been credited to discount received, so debit discount allowed and credit discount received with $60,000.