Commerce Exam  >  Commerce Questions  >  The Balance of ABC Ltd. as on Dec 31 2002 did... Start Learning for Free
The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1?
Most Upvoted Answer
The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The differenc...
Suspense Account and its Purpose

The Suspense Account is a temporary account used to record discrepancies or errors in the balance of a company's books. It serves as a placeholder for transactions that cannot be immediately identified or rectified. The purpose of the Suspense Account is to ensure that the balance sheet of the company is accurate and balanced.

Reasons for Differences in Balance

There can be several reasons why the balance of a company's books does not agree. These can include errors in recording transactions, incorrect posting of entries, omissions, or mistakes in calculations. In the case of ABC Ltd., the difference in the balance as of December 31, 2002, was put into a Suspense Account to be investigated and corrected in the next trading period.

Discoveries in the Next Trading Period

During the next trading period, several discoveries were made that contributed to the difference in the balance. These include:

1. Sale-book discrepancy: The total of one page of the Sale-book was carried forward incorrectly. Instead of being carried forward as R. 6,531, it was entered as R. 6,351 on the next pages. This resulted in an understatement of sales.

2. Goods returned but wrongly recorded: A customer returned goods worth R. 1,200, but it was erroneously entered in the Purchases Return Book instead of the Sales Return Book. This led to an overstatement of purchases and an understatement of sales.

3. Error in purchases entry: An item of purchases worth R. 151 was mistakenly entered in the Purchases Book as R. 15. Additionally, it was posted to the Supplier's account as $1 instead of the correct amount. This resulted in an understatement of purchases and an incorrect posting to the Supplier's account.

Impact on the Suspense Account and Correction

These discoveries indicate that the Suspense Account will be affected in the following ways:

- The incorrect carried forward amount from the Sale-book will be adjusted to reflect the correct total of R. 6,531.

- The goods returned by the customer will be transferred from the Purchases Return Book to the Sales Return Book to rectify the error.

- The incorrect entry in the Purchases Book and the wrong posting to the Supplier's account will be corrected, reflecting the correct amount of R. 151 in purchases and the accurate posting to the Supplier's account.

Once these adjustments are made, the corrections will be reflected in the respective books and accounts, ensuring that the balance of ABC Ltd.'s books agrees and the Suspense Account is cleared.

Conclusion

In conclusion, the differences in the balance of ABC Ltd.'s books as of December 31, 2002, were put into a Suspense Account. During the next trading period, various errors were discovered, including a discrepancy in the Sale-book, incorrect recording of goods returned, and errors in purchases entry and posting. These errors will be rectified by adjusting the Sale-book, transferring the goods return to the correct book, and correcting the purchases entry and posting. Once these corrections are made, the balance of the books will agree, and the Suspense Account will be cleared.
Attention Commerce Students!
To make sure you are not studying endlessly, EduRev has designed Commerce study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in Commerce.
Explore Courses for Commerce exam

Top Courses for Commerce

The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1?
Question Description
The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1?.
Solutions for The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1? in English & in Hindi are available as part of our courses for Commerce. Download more important topics, notes, lectures and mock test series for Commerce Exam by signing up for free.
Here you can find the meaning of The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1? defined & explained in the simplest way possible. Besides giving the explanation of The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1?, a detailed solution for The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1? has been provided alongside types of The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1? theory, EduRev gives you an ample number of questions to practice The Balance of ABC Ltd. as on Dec 31 2002 did not agree. The difference was put to a Suspense Account. During the next trading period, the following were discovered: Stay I (1) The total of the Sale-book of one page R. 6,531 was carried forward to the next pages 6,351 (15) Goods returned by a customer for 1,200 but entered in Purchases Return Book (vi) An item of purchases of 151 was entered in Purchases Book as 15 and posted to Supplier's account as $1? tests, examples and also practice Commerce tests.
Explore Courses for Commerce exam

Top Courses for Commerce

Explore Courses
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev