suspense account

I find doing my workings in T-accounts makes things simpler. I’ve just done the p2, and I’m glad that I’m comfortable with T-accounts.

What has been done incorrectly? Well, the bank entry is correct as we have paid cash; however, the corresponding Dr has not been entered and has instead been Cr to the rent account – we should have Dr the rent account as this is an expense!

Therefore, Dr the rent account to reverse the mistake, and Dr it again to enter the expense.
Rent account:
Dr 500 (correct mistake)
Dr 500 (enter expense)
Total =1000
As I said above, the bank account has been entered correctly.

For the suspense account we will need to work out what the difference on the trial balance would have been due to the mistake.
We made a Cr of $500 in the cash account for the payment of rent, so the Cr balance would be $500
To match this $500, we needed to Dr the rent account with $500 to bring the trial balance to 0 (500-500=0)
However, we credited the rent account with $500, bringing the Cr balance to $1000 (500+500)

Therefore, the difference on the trial balance would be $1000 more on the credit side.
We open a suspense account with the amount of Dr we would need to bring the trial balance to 0 i.e $1000

Suspense account = Dr 1000
rent = Dr 1000
Bank = 0 (correctly entered)

I don’t think this last point is part of your question, but we would finally Cr the suspense account to match the Dr on the rent account. This would then close the suspense account and correct the rent account – the suspense account must be closed!