Correcting drawings error with suspense for imbalance

Steps:

• Original error: Debited purchases $200 (overstated expense), credited sales$300 (overstated revenue), netting $100 profit overstatement and$100 trial balance credit excess (balanced via suspense debit $100).
• Reverse sales overstatement: Debit sales $300 to reduce revenue in income statement.
• Reverse purchases overstatement: Credit purchases $200 to reduce expense in income statement.
• Clear suspense: Credit suspense $100 for the original imbalance; total adjustment reflects$500 handling ($300 sales +$200 purchases).

Why B is correct:

• Income statement adjusted for $300 sales reversal (removes fictitious revenue per double-entry principle), suspense clears$500 total reversal ($300 +$200) to balance accounts.

Why the others are wrong:

• A: Involves drawings $200 correctly but credits suspense$300 (wrong amount; ignores $200 purchases reversal).
• C: Adjusts sales $300 but credits income statement$200 (reverses expense incorrectly without suspense for imbalance).
• D: Credits suspense $500 but debits drawings$300 (drawings should be $200 cost, not selling price).

Final answer: B