Principles of account?
Question:
the above case is my homework regarding correction of errors, i think that should be debit to T.C. account because there has imbalance, which account should be credit? purchase, stock, trading or suspense?
or u hv another advice?
i'm looking for ur help. thx.
Answer:
Refer to credit card account provider (eg VISA). Credit transactions are protected and errors should be dealt with by the credit facility provider.
I guess this is probably not the answer you are looking for but good luck.
Problem is with the wording "entered in his account as $6600" - "entered" does not define if the value was transacted as a credit or debit and there is no such thing as "his account" (you only have purchase, stock, trading and suspense accounts).
My immediate response would be '"reverse the incorrect transaction(s) and then transact the correct ammount(s)".
When you purchase on Credit I would expect the following 4 transactions:-
Stock credit £2600 (you have the goods for resale), Purchase debit £2600 (you bought them), Trading credit £2600 (you havn't paid for the goods yet), Suspense debit £2600 (you owe the supplier). So all 4 have to be reversed and re-entered (note - do NOT simply transact the "difference" = to do so would create TWO transactions where only one should exist (actually, normal Database transaction 'rules' would prevent this when you attempt to re-used the unique Order Number).
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