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Help with journals unit 3

DONKSDONKS New MemberRegistered Posts: 12
Hi

An amount of 50.00 had been debited to misc exp account instead of rent

An amount paid by cheque for rent as been recorded as 20 instead of the correct amount of 200.00

an amount of 75 has been cretited to suspense account. The folliowing errors have been found

a payment of 1000 has been recorded as 1100 in the insurnace account
an amount of 25.00 has been ommitted from the stationery accoun

What would the journal enteries be in the main Ledger??

Thanks x

Comments

  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    Dr Rent 50
    Cr Misc exp 50

    Dr Rent 180
    Cr Bank 180

    Dr Stationery 25
    Cr Susp. A/c 25

    Dr Susp a/c 100
    Cr Insurance 100

    And that leaves a zero balance on the suspense account.
  • CookiemonsterCookiemonster New Member Registered Posts: 14
    I am a little confused with PGM's reply as I was told and I've just checked in one of the books I have.(Osbourne Foundation accounting, second edition- page 432) That if there is an correction of original entry it is better to reverse it and do the correct one

    Quote from page:
    Postage of £45 paid by cheque entered in the accounts as £54

    This error could have been corrected by debiting bank and crediting postage with £9, being the difference between the two amounts. However, there was no original transaction for this amount, and it is better to recerse the wrong transaction and put though the correct one.

    Does it actually matter which way you do it as long as the entry has been fixed??? :-/

    I wish they would stick to one rule instead of changing things all the time, no wonder it's so confusing!!! x
  • RinskeRinske Font Of All Knowledge Registered Posts: 2,453
    As far as I'm aware, you can do both.

    It is often easier to just correct it with the difference, but in a real work situation you would need to make some clear notes as to what happened.

    If you cancel the original entry and re-enter it, the audit trail is clearer, but in a real work situation it also often is more work and depend on when the mistake was found and what period you're working in etc.
  • PGMPGM Font Of All Knowledge Registered Posts: 1,954
    I am a little confused with PGM's reply as I was told and I've just checked in one of the books I have.(Osbourne Foundation accounting, second edition- page 432) That if there is an correction of original entry it is better to reverse it and do the correct one


    The question says whats the journal to correct the entry. And either method would correct it.

    Theres often more than one method, and in a work situation thats when you need some consistency.

    But, in an exam question they may not give both entries to be able to reverse the original journal.

    Another point, if the other entry is bank, I'd be correcting the bank receipts and not doing a journal to the bank.
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