When the trial balance extracted from the books of Keman Enterprises at the year-end failed to balance, the difference was placed in a Suspense account. Identify the amount that would have been placed in suspense as a result of each of the following errors; GH₵ 2,400 pre-paid insurance has been brought forward from the previous year as a credit balance.

A. Dr 4,800

B. None

C. Cr 2,400

D. Dr. 1,500

Question

Business

Nigel Dawson

24 June, 21:16

When the trial balance extracted from the books of Keman Enterprises at the year-end failed to balance, the difference was placed in a Suspense account. Identify the amount that would have been placed in suspense as a result of each of the following errors; GH₵ 2,400 pre-paid insurance has been brought forward from the previous year as a credit balance.

A. Dr 4,800

B. None

C. Cr 2,400

D. Dr. 1,500

+1

Answers (1)

Know the Answer?

Giovanni Cummings · Answer 1

The answer is option (A) Dr 4,800

Explanation:

Solution

From the given question, the prepaid insurance normally is having a debit balance.

When it is brought forward to next year, this GH₵ 2,400 has to be cancelled once by debiting to suspense account.

Also. it want 2400 to credit the balance in prepaid insurance ledger, it need or require to be credited and debited to suspense account with 2400 balance.

Now, this combined debit to suspense account will result to 4800 (2400 + 2400).