Discount allowed on goods invoiced at N100,000 was calculated at the rate of 20% instead of 10%. The error is corrected by debiting
- customer account with N20,000 crediting discount allowed with N20,000
- discount allowed with N10,000; crediting customer's account with N10,000
-
customer's account with N10,000, crediting discount allowed with N10,000
- discount allowed with N20,000, crediting cash with N20,000
The correct answer is: C
Explanation
This means the discount allowed was in surplus of N10,000. The discount allowed is an expense of the seller and it is recorded on the debit side of the seller's book. To correct this error, we will enter a corresponding N10,000 amount on the credit side of the book to cancel the excess amount.