Journal Correction
liam89
Registered Posts: 27 Epic contributor 🐘
I'm currently working through level two and have come to a bit of a snag on a journal correction question.
Q: A rates bill that has been paid by cheque has been credited to both the rent account and the bank account. Complete the double entry to correct this error
a) DR Rent Account £800
CR Suspense Account £800
b) DR Rates Account £800
CR Suspense Account £1600
c) DR Bank Account £800
CR Rates Account £1600
d) DR Suspense Account £800
CR Rates Account £1600
My thinking was that the Bank was correctly credited (with what I assume is an £800 bill) as it is a reducing asset account, but the Rent account was credited when the Rates account shouldve been debited.
Therefore, I should debit the Rent account with £800 to correct the error, and debit the Rates account with £800 to correctly post it. Then, as there are now £1600 more DR than CR after these postings, I should CR suspense with £1600.
So, my answer came out as.....
DR Rent £800
DR Rates £800
CR Suspense £1600
Is this correct? And if it is, is it the case that the answer is b) but they have just not added the Rent debit. If my workings are wrong, could someone explain where I went wrong please?
Thanks
Q: A rates bill that has been paid by cheque has been credited to both the rent account and the bank account. Complete the double entry to correct this error
a) DR Rent Account £800
CR Suspense Account £800
b) DR Rates Account £800
CR Suspense Account £1600
c) DR Bank Account £800
CR Rates Account £1600
d) DR Suspense Account £800
CR Rates Account £1600
My thinking was that the Bank was correctly credited (with what I assume is an £800 bill) as it is a reducing asset account, but the Rent account was credited when the Rates account shouldve been debited.
Therefore, I should debit the Rent account with £800 to correct the error, and debit the Rates account with £800 to correctly post it. Then, as there are now £1600 more DR than CR after these postings, I should CR suspense with £1600.
So, my answer came out as.....
DR Rent £800
DR Rates £800
CR Suspense £1600
Is this correct? And if it is, is it the case that the answer is b) but they have just not added the Rent debit. If my workings are wrong, could someone explain where I went wrong please?
Thanks
0
Comments
-
Based on the question your answer looks correct, perhaps you mistyped it or there is a typo in the question?
The suspense account would definitely need a credits totaling £1600, so (b) would have to be correct, but all journal entries must balance to 0 as its double entry, the only option where this happens is (a).
Basically, you have answered the question you have posted here correctly imo and the 4 options are all wrong.
On second thoughts MAYBE the question is supposed to imply that the rates account was correctly debited already. In which case the only account containing an error would be the rent account and option (a) would be correct. It's a bad question.0 -
Thanks Steve.
In an odd way I was hoping that I had got it wrong so there was a eureka moment in figuring out what the solution was!0 -
I agree it's badly worded. You could interpret it as the credit to the rent account was either in addition to the correct rate account debit, or instead of it. I think it's definitely one where you have to use the answers to figure out what the question means.0
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