- This topic has 3 replies, 2 voices, and was last updated 11 years ago by
.
- Posts
Hi,
I’ve been currently studying suspense accounts and my question is, why the opening balance of the suspense a/c isn’t on the Dr side, the example is from F3 book:
– I would say we have a beginning Cr bal higher than Dr by 4000, why the solution shows a Cr 8000, this is contrary to the rule for opening bal of a suspense a/c, if a Trial Bal Cr is higher than Dr we should have a Dr opening bal of suspense a/c and here it’s not like that, what is it that I’m missing in my understanding?
Example:
A discount allowed of $4,000 (expense) has been recorded as a credit entry in the discount received account (an income account) by mistake.Solution:
Dr Discounts received 4,000
Dr Discounts allowed 4,000
Cr Suspense account 8,000
= Correction of errorThank you very much for a help!
MP
In the example you gave, the opening balance on the suspense account would indeed be a debit (because the credits are higher than the debits).
However this has only happened because there are mistakes and when the are corrected the balance on suspense will be zero.
So to correct the mistake we make the entry that you have listed, and credit the suspense account. This would make the balance on suspense zero.
Hallo,
My confusion came from the fact, that I was wondering where to write the op. bal of the suspense a/c, so I see that the base rule applies, and if I draw a T a/c with all the entries together it would look like this:
Suspense a/c
———————————————
Op.Bal. 8000 | Disc all’d/ rec’d 8000I think I made it clear to me now.
Thank you!
MP
- You must be logged in to reply to this topic.