A trial balance was out of balance and a suspense account with a debit balance of £250 was opened. The error was later found: a discount received of £250 had been credited to the discount received account, but no entry was made in the trade payables control account. Which journal corrects the error?

Answer and explanation

Correct answer: B. Debit trade payables control £250, credit suspense £250

  1. Step 1: The discount received entry was a credit with no matching debit, so debits fell short by £250 and a debit of £250 was put in suspense.
  2. Step 2: Discount received reduces the amount owed to the supplier, so the missing entry is a debit to the payables control account.
  3. Step 3: The balancing credit goes to suspense, which clears it to nil.
Answer
Debit trade payables control £250, credit suspense £250.
Why not the others: This is the wrong way round: it would double the suspense balance and increase the amount owed. This would remove the discount, though the discount itself was correctly recorded and only the other side was missing. This credits discount received a second time, making the income £500 and leaving the suspense account uncleared.

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