Revision question on correction of errors and preparation of suspense account.

(a) Explain circumstances under which a suspense account may be opened.
(b) The trial balance totals of Mukunzi for the year ended 30 June 2017 were:
Debit TZS 400,000
Credit TZS 399,000

She recorded the difference in a suspense account and proceeded to prepare financial statements.  Further scrutiny of her accounting records revealed the following errors:

1 A credit sale TZS 8,000,000 was not entered the sales day book.
2 Discounts received TZS 230,000 were entered the debit side of the discounts allowed account as TZS 320,000 but properly recorded in the trade payables’ ledger account.
3 A cheque TZS 4,500,000 from Jane was wrongly recorded in Joan’s account as TZS 5,400,000 but properly recorded in the bank account.
4 Commission received TZS 160,000 and additional capital TZS 30,000,000 were all wrongly credited in the sales account but recorded properly in the corresponding ledger accounts.
5 Carriage inwards TZS 940,000 was wrongly debited in the carriage outwards account as TZS 490,000.  The corresponding account was properly treated.


Prepare for Makunzi for the year ended 30 June 2017:

(i) Journal entries to correct the above errors (ignore narrations).
(ii) A suspense account following the correction of the errors.

Leave a Comment

Your email address will not be published. Required fields are marked *

%d bloggers like this: