Neco Model Questions Vol1 2022 Financial Accounting Question 26

Practice objective / multiple choice question 26 from the 2022 Neco Model Questions Vol1 Financial Accounting examination.

Neco Model Questions Vol1 2022 Financial Accounting Objective / Multiple Choice Medium Difficulty
Question 26 NECO_MODEL_QUESTIONS_VOL1 • 2022 • FINANCIAL_ACCOUNTING • objective

During the accounting period a cash sale of \(\text{₦}80,000\) was mistakenly recorded as a cash receipt. In reality the sale was on credit and only \(\text{₦}30,000\) of cash was received from a different customer. The incorrect entry made was: Debit Cash \(\text{₦}80,000\), Credit Sales \(\text{₦}80,000\). Determine the amount that must be transferred to the Suspense Account and write the correcting journal entries required to rectify the error.

Answer Options

A. Transfer \(\text{₦}50,000\) to Suspense. Correcting entries:\n1) Debit Suspense \(\text{₦}50,000\), Credit Cash \(\text{₦}50,000\);\n2) Debit Accounts Receivable \(\text{₦}80,000\), Credit Sales \(\text{₦}80,000\);\n3) Debit Cash \(\text{₦}80,000\), Credit Accounts Receivable \(\text{₦}80,000\).
Correct Answer B. Transfer \(\text{₦}50,000\) to Suspense. Correcting entries:\n1) Debit Suspense \(\text{₦}50,000\), Credit Cash \(\text{₦}50,000\);\n2) Debit Accounts Receivable \(\text{₦}80,000\), Credit Sales \(\text{₦}80,000\);\n3) Debit Cash \(\text{₦}30,000\), Credit Accounts Receivable \(\text{₦}30,000\).
C. Transfer \(\text{₦}30,000\) to Suspense. Correcting entries:\n1) Debit Suspense \(\text{₦}30,000\), Credit Cash \(\text{₦}30,000\);\n2) Debit Accounts Receivable \(\text{₦}80,000\), Credit Sales \(\text{₦}80,000\);\n3) Debit Cash \(\text{₦}30,000\), Credit Accounts Receivable \(\text{₦}30,000\).
D. Transfer \(\text{₦}50,000\) to Suspense. Correcting entries:\n1) Debit Suspense \(\text{₦}50,000\), Credit Cash \(\text{₦}50,000\);\n2) Debit Accounts Receivable \(\text{₦}30,000\), Credit Sales \(\text{₦}30,000\);\n3) Debit Cash \(\text{₦}30,000\), Credit Accounts Receivable \(\text{₦}30,000\).
Correct Answer
B
Correct Option:
Transfer \(\text{₦}50,000\) to Suspense. Correcting entries:\n1) Debit Suspense \(\text{₦}50,000\), Credit Cash \(\text{₦}50,000\);\n2) Debit Accounts Receivable \(\text{₦}80,000\), Credit Sales \(\text{₦}80,000\);\n3) Debit Cash \(\text{₦}30,000\), Credit Accounts Receivable \(\text{₦}30,000\).

About This Question

This is Neco Model Questions Vol1 2022 Financial Accounting Question 26. It is one of the objective questions from the 2022 Neco Model Questions Vol1 Financial Accounting examination.

Difficulty level: Medium .

View More Neco Model Questions Vol1 2022 Financial Accounting Questions More Neco Model Questions Vol1 Practice Questions Back to Questions

Master the Exam!

You've seen a preview, but there are thousands more questions plus AI tutor to break down complex solutions.

Unlock Full Access Available for Android & Windows
Chat with Support