The trial balance of a sole trader failed to agree and the balance was entered...
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Accounting
The trial balance of a sole trader failed to agree and the balance was entered into a suspense account. An examination of the books and records of the sole trader revealed the following:
• During the year, €/£2,250 interest received on favourable bank balances were correctly entered in the cash book but debited to the interest expense account.
• A payment of €/£7,100 for rent had been correctly recorded in the cash book but debited to the rent account as €/£17,000.
When these entries are corrected the trial balance will balance.
You are required to:
i. Prepare journal entries to correct the above errors. Narratives are not required.
ii. Hence derive the opening balance in the suspense account.
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