Before worrying about how to do the corrections, you need to identify where the mistake is. The specific calculation error is pretty obvious - but think about what it would have affected.
Date
20xx
Details
Invoice
Number
Total
£
VAT
£
Net
£
30 Jun
Able Paints Ltd
2763
2,400
400
2,000
30 Jun
Matley Materials
2764
3,120
520
2,600
30 Jun
Teesdale Parts
2765
4,080
680
3,400
Totals
960
1,600
8,000
The suspense balance is equivalent to the error - £8,640.
In order to correct it, you need to think about:
What part of the trial balance is going to be affected by the mistake. Is it an individual purchase ledger account? Is it the net purchases? Is it the purchase ledger balance?
Whichever account it affects - does it result in a higher debit or credit balance than it should be?
If so, which side of the suspense account is that suspense balance on - debit or credit?
Once you've established those key details, what they're asking you to write in answers (i) (ii) and (iii) are each individual line of a three line journal.
(i) is the line that will remove the incorrect figure from the relevant account you will have established above
(ii) is the line that will put the correct figure in that account.
(iii) is the line that then removes the amount from the suspense account.
The total debits in (i) - (iii) will obviously match the total credits because the three answers make up a single journal.
Note also that (i) and (ii) could have been rolled into one - the difference on whichever account is affected - but the way they've done it makes more sense for someone studying, because it helps show what's going on.
__________________
Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
Before worrying about how to do the corrections, you need to identify where the mistake is. The specific calculation error is pretty obvious - but think about what it would have affected.
Date
20xx
Details
Invoice
Number
Total
£
VAT
£
Net
£
30 Jun
Able Paints Ltd
2763
2,400
400
2,000
30 Jun
Matley Materials
2764
3,120
520
2,600
30 Jun
Teesdale Parts
2765
4,080
680
3,400
Totals
960
1,600
8,000
The suspense balance is equivalent to the error - £8,640.
In order to correct it, you need to think about:
What part of the trial balance is going to be affected by the mistake. Is it an individual purchase ledger account? Is it the net purchases? Is it the purchase ledger balance?
Whichever account it affects - does it result in a higher debit or credit balance than it should be?
If so, which side of the suspense account is that suspense balance on - debit or credit?
Once you've established those key details, what they're asking you to write in answers (i) (ii) and (iii) are each individual line of a three line journal.
(i) is the line that will remove the incorrect figure from the relevant account you will have established above
(ii) is the line that will put the correct figure in that account.
(iii) is the line that then removes the amount from the suspense account.
The total debits in (i) - (iii) will obviously match the total credits because the three answers make up a single journal.
Note also that (i) and (ii) could have been rolled into one - the difference on whichever account is affected - but the way they've done it makes more sense for someone studying, because it helps show what's going on.
thanks Vince for important info. Now i get that those three lines stand for double entry that has equal amount on credit and debit side
