A sales return of Rs. 3,000 is credited to Sales Account instead of being debited to Returns Inward Account. The customer's account is correctly credited. Which entry rectifies the error?
Correct answer: C. Debit Returns Inward Rs. 3,000, debit Sales Rs. 3,000 and credit Suspense Rs. 6,000
- A. Debit Returns Inward Rs. 3,000 and credit Sales Rs. 3,000
- B. Debit Sales Rs. 3,000 and credit Returns Inward Rs. 3,000
- C. Debit Returns Inward Rs. 3,000, debit Sales Rs. 3,000 and credit Suspense Rs. 6,000
- D. Debit Suspense Rs. 6,000 and credit Returns Inward Rs. 6,000
Explanation
Returns Inward needs a debit of Rs. 3,000, while the incorrect credit to Sales must be cancelled by a debit of Rs. 3,000. The total debit is Rs. 6,000, so Suspense receives the corresponding credit.
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About Correction of Errors and Suspense Accounts
Accounting errors are corrected by journal entries after identifying whether the mistake affects one account or both sides of double entry. Suspense accounts temporarily hold an unexplained trial balance difference and must be cleared, while errors of omission, commission, principle, original entry and reversal require different corrections.
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