Help needed for The Journal and the Correction of errors revision

Philipio
Philipio Registered Posts: 1 New contributor 🐸
in General discussion
Hello,

I'm revising for a bookkeeping and accounts Level 2 exam on Friday and am unsure on some of the journal and the correction of errors questions

I'm struggling a bit on discount received and discount allowed as it didn't get explained to us much at Level 1

Are my answers for these correct? (I wont bother with the narratives)

the total of the discount received column for June amounting to $974 on the credit side of the cash book had not been posted to the discount received account


Discount Received 974 DR
Suspense 974 CR

A cheque for £650 received from John West in settlement of his debt for £675 (the balance being discount) had been correctly recorded in the cash book. No entries have yet been made to record the transaction in John West's account


Suspense 675 DR
Trade Debtors 650 CR
Trade Debtors 25 CR
John West 650 CR
John west 25 CR

Paul had taken goods valued at cost £500 from the business and donated them to a local charity sale as a business donation. No entires had been made for this

Drawings 500 DR
Purchases 500 CR

Comments

  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
    Philipio wrote: »

    the total of the discount received column for June amounting to $974 on the credit side of the cash book had not been posted to the discount received account

    Discount allowed / Discount received columns in the cash book do not form part of double entry. Those column act only as a memorandum note. Because it does not affect the cash book you will have to do the deouble entry posting and suspense a/c is not affected.

    Debit PLCA $974
    Credit Discount Received $974


    Philipio wrote: »

    A cheque for £650 received from John West in settlement of his debt for £675 (the balance being discount) had been correctly recorded in the cash book. No entries have yet been made to record the transaction in John West's account


    On this transaction one part of the double entry has been made ie £650 debited in cash book. Therefore when balaning your trial balance you will need to a credit balance in the suspense a/c to balance the trial balance.

    THE CORRECTION journal will be

    Debit Suspense a/c £650
    Credit SLCA a/c £650

    The discount in the cash book does not affect the imbalace of the double entry.
    therefore the following journal is required

    Debit Discount Allowed £25
    Credit SLCA a/c £25
    Philipio wrote: »

    Paul had taken goods valued at cost £500 from the business and donated them to a local charity sale as a business donation. No entires had been made for this


    The above is a business expense (busines donations) and not paul's private expense

    Debit Purchases a/c £500
    Credit Donation account £500

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