During preparation of a trial balance the following balances are shown:

- Purchases Account: Credit ₦12,000
- Sales Account: Credit ₦30,000
- Cash Account: Debit ₦20,000
- Suspense Account: Debit ₦0

It is later discovered that the credit balance in the Purchases Account is an error - the amount should have been recorded on the debit side. To correct the error the accountant debits the Purchases Account ₦12,000 and credits the Suspense Account ₦12,000. After this correction the trial balance is still not balanced. Determine the final balance (debit or credit and amount) that must remain in the Suspense Account to bring the trial balance into balance, and state the corrected balance of the Purchases Account.

Question

During preparation of a trial balance the following balances are shown:

- Purchases Account: Credit ₦12,000
- Sales Account: Credit ₦30,000
- Cash Account: Debit ₦20,000
- Suspense Account: Debit ₦0

It is later discovered that the credit balance in the Purchases Account is an error - the amount should have been recorded on the debit side. To correct the error the accountant debits the Purchases Account ₦12,000 and credits the Suspense Account ₦12,000. After this correction the trial balance is still not balanced. Determine the final balance (debit or credit and amount) that must remain in the Suspense Account to bring the trial balance into balance, and state the corrected balance of the Purchases Account.

Accepted Answer

Purchases Account balance becomes zero; Suspense Account ends with a debit balance of ₦10,000

Gce Model Questions Vol1 2017 Financial Accounting Question 37

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