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QS1)
Blunder Boy’s trial balance did not balance and a suspense account was opened to restore equality.
It was discovered that:1. the sales returns day book had been overcast by $270;
2. an invoice for $2,600 was incorrectly entered in the sales day book at $6,200;
3. a cheque for $500 from a credit customer had been debited to payables in error.
What was the original balance on the suspense account?Advice
The correct answer is: $1,000 credit.The original entries had two debits of 500, with no corresponding credits. So the ?nal balance would have had 1,000 more debits than credits. Therefore a suspense account needed to be set up with an opening balance of 1,000 credit.
From this I gather daybooks are not included in the trial balance?
QS2)
Which of the following errors could explain a suspense account balance of $50 (debit) on a preliminary trial balance?
A Discounts received of $50 had been omitted from the trial balance.
B The total column of the cash payments book was overcast by $50.
C An invoice for $550 was recorded as $500 in the receivables ledger.
D The credit side of the cash account was undercast when the nominal ledger was balanced off.Correct answer is B
Daybooks are not accounts – they are simply lists. They are therefore not included in the trial balance. (The totals from the daybooks are used to do the posting in the ledger accounts). You should watch my lecture on Books of Prime Entry.
The correct answer for question 2 is indeed B.
Is your problem as to why B is correct or as to why the other answers are not correct?Thank you very much for your time John!
from my understanding this is the suspense account entry on the trial balance its talking about & not the suspense account itself so
A Discount received is a credit entry in the trial balance = credit balance
B The debit side of the cash account was undercast = debit balance 50
C An invoice for $550 was recorded as $500 in the receivables ledger = 50 more needed on the debit side of receivables ledger so debit balance on TB 50 (this would mean correct answer also?)
or is it because its supposed to be payables ledger account therefore purchases undercast by 1600 ( 550*2 +500)?D Credit balance
just a little confused and wanting confirmation thanks again!
No.
The receivables ledger does not appear in the trial balance.
The receivables ledger contains accounts for each individual customer, but is note only – it is not part of the double entry.The double entry for sales on credit is debit receivables account and credit sales account – these two accounts do appear on the trial balance.
So C is not relevant 🙂
thanks just to clarify…
NOT AFFECT the trial balance
(unless in the question it says that their entry has)Purchase return day books
Sales return day books
Purchases day books
Sales daybooks
Receivables ledger
Payables ledger
Cash payments
Cash receipts
Payables journal
Sales journal
Nominal ledger accounts
Memorandum accountsDOES AFFECT the trial balance
General ledger accounts
Sales account
Purchases account
Payables account
Receivables account
Cash account
Purchase returns account
Sales returns account
TOTAL receivables or payables ledger account / Control accounts
Capital account??????????????????????????????
Correct. Except two things.
One is that the nominal ledger and the general ledger are different names for the same thing.
Secondly, the trial balance is simply a list of the balances on all the accounts in the
nominal/general ledger.
Cash account, purchases account, etc. are all accounts in the nominal ledger. (There are potentially lots and lots of these – not just those you listed.)So general/nominal ledger = trial balance account = Cash account, purchases account, etc
Purchase ledger and receivables ledger = not on trial balance
Very confusing!
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