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Hallo,
May I ask, is there a rule of thumb about the opening balance of a suspense a/c.
So, far I’ve learnt that if we have
Dr > Cr we have a Cr op. bal. of the suspense a/c
if
Dr < Cr we have a Dr op. bal. of the suspense a/cBut, a recent example that I did didn’t follow that rule, even though the Dr > Cr the op. bal. of the suspense a/c was a Dr, not a Cr, so we can’t say that there is a fixed rule, it all depends on the wrong entries which have to be corrected or made if omitted, they are the ones that lead us to which side is less, and this where the op. bal. should be, is this correct, so we can’t say that the above rule applies to all cases?
Thank you!
You should not learn anything as rules – the exam is designed in a way that checks you understand rather than have just learned rules.
However, the purpose of the suspense account is to make the trial balance balance. So if (because of mistakes) the Dr column of the trial balance is greater than the Cr column, then the balance on the suspense account had to be a Cr (to make the trial balance balance).
Vice versa if the Dr column is lower than the Cr column.Hallo,
Yes, but looks like in this example this is not applicable, that’s why I thought this is not always like that:
When a trial balance was prepared, two ledger accounts were omitted:
Discounts received $6,150
Discounts allowed $7,500
To make a trial balance balance, a suspense account was opened.
What was the balance on the suspense account?The op. bal. here is a Dr of 1350 and according to what you wrote above it should be a Cr, so I can’t always rely on this assumptions, can I, what should guide me then, I see two ways now, which are opposite actually?
Thank you!
There are not two opposite ways at all!
They have missed out a Cr of 6150 and missed out a Dr of 7500.
Therefore the credit column will total more than the debit column.
Therefore an extra debit is needed to make it balance – the balance on suspense will be a debit.Hallo,
Yes, I’ve missed that part again, that the TB will be having the opposite balance till the mistake is corrected.
Thank you!
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