Question

Modern Traders completed books of accounts, prepared Trial Balance for 30th June 2006. It found “debits” exceeded “credits” by $ 27,880 and was credited to suspense account, after sometime following errors were detected:
Sales returns book was undercast by $1,000.
Purchase of furniture for $3,000 was passed through purchase day book.
$3,750 paid as wages to workers for making show-cases was charged to wages account.
Purchase of $ 6,710 was posted to the debit of creditors account as $ 6,170.
A cheque for $2,000 received from Saleem was dishonoured & was passed to the debit of allowances account.
Goods costing $ 1,000 had been returned by a customer and were taken into stock but no entry was made in the books.
A sale of $ 2,000 to Imran & co. was credited to their account.
Sale amounting to $10,000 was passed through purchased day book. The customer’s account had however been correctly debited.
Required:
(A) Journal Entries (without narration) to rectify the errors with reasons.
(B) suspense Account

Answer 1

Answer on Question #62499 - Economics - Accounting

Modern Traders completed books of accounts, prepared Trial Balance for 30th June 2006. It found "debits" exceeded "credits" by $27,880 and was credited to suspense account, after sometime following errors were detected:

Sales returns book was undercast by $1,000.

Purchase of furniture for $3,000 was passed through purchase day book.

$3,750 paid as wages to workers for making show-cases was charged to wages account.

Purchase of $6,710 was posted to the debit of creditors account as $6,170.

A cheque for $2,000 received from Saleem was dishonoured & was passed to the debit of allowances account.

Goods costing $1,000 had been returned by a customer and were taken into stock but no entry was made in the books.

A sale of $2,000 to Imran & co. was credited to their account.

Sale amounting to $10,000 was passed through purchased day book. The customer's account had however been correctly debited.

Required:

(A) Journal Entries (without narration) to rectify the errors with reasons.

(B) suspense Account

Solution

Journal Entries

Suspense Account

Dr. Cr.

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