When the trial balance of ABC Ltd as at 30/9/2008 was prepared, the debit side was short by $ 1195. A suspense account was created in order to achieve the balance:Examination of the books showed the following:Discount allowed of $76 had been credited to the Discount Received AccountA sale of $151 to Mr. A had been posted correctly to the personal account but entered in the Sales Day book as $ 115A Cheque received from Mr. B entered correctly in the Cash Book as $766 had been posted to the company’s account as $760The Purchase of new machinery for $1200 had been posted to the Stock account. Depreciation is ignored for the year in which the machinery is purchasedA sale of $265 to Mr. C had not been posted to his accountA petty cash balance of $100 was omitted from Trial BalanceBank interest charges of $720 were correctly entered in the Cash Book but the other side of the double entry had been omittedRequired:Prepare Journal entries to correct the above errors, without narrations.Prepare a Suspense Account

A suspense account would be used to provisionally retain transactions in which it is unclear where…

Answered: When the trial balance of ABC Ltd as at…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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When the trial balance of ABC Ltd as at 30/9/2008 was prepared, the debit side was short by $ 1195. A suspense account was created in order to achieve the balance:

Examination of the books showed the following:

Discount allowed of $76 had been credited to the Discount Received Account
A sale of $151 to Mr. A had been posted correctly to the personal account but entered in the Sales Day book as $ 115
A Cheque received from Mr. B entered correctly in the Cash Book as $766 had been posted to the company’s account as $760
The Purchase of new machinery for $1200 had been posted to the Stock account. Depreciation is ignored for the year in which the machinery is purchased
A sale of $265 to Mr. C had not been posted to his account
A petty cash balance of $100 was omitted from Trial Balance
Bank interest charges of $720 were correctly entered in the Cash Book but the other side of the double entry had been omitted

Required:

Prepare Journal entries to correct the above errors, without narrations.
Prepare a Suspense Account

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