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Q:A suspense account was opened when a trial balance failed to balance.When the following errors were corrected,the suspense account was cleared:
-A gas bill for $420 was entered on the correct side of the gas account as $240.
-A discount of $50 given to a customer had been credited to the discounts received account.The other entry had been made correctly.
-Interest received of $70 was entered correctly in the bank account,but no other entry was made.
What was the balance on the suspense account when it was created?
A)Debit $210
B)Credit $210
C)Debit $160
D) Credit $160
The correct answer is A but how ? Should not we open a suspense account of $180 with a debit balance as they debits are understated by $180?. Gas expense account is understated by $420 – $240 =$180
CORRECTION Dr Gas exp. a/c $180
Cr Suspense a/c $180
2. Discount allowed $50 was credited as Dis.. Received
CORRECTION Dr $100 $50 to cancel out the initial Cr entry and the other $50 to record the dis… allowed.
Cr. SUSPENSE $100
3. Interest received was debited in the bank account $70 nothing credited.
CORRECTION Dr suspense $70
Cr interest received $70
NOW BALANCE ON SUSPENSE ACCOUNT
Dr Cr
$ $
Balancing figure 210 to gas expense 180
Interest rec… 70 to discount allowed. 100Total 280 280
THE OPENING BAL.. ON SUSPENSE WAS $210 Debit@liljamz said:
. Gas expense account is understated by $420 – $240 =$180
CORRECTION Dr Gas exp. a/c $180
Cr Suspense a/c $180
2. Discount allowed $50 was credited as Dis.. Received
CORRECTION Dr $100 $50 to cancel out the initial Cr entry and the other $50 to record the dis… allowed.
Cr. SUSPENSE $100
3. Interest received was debited in the bank account $70 nothing credited.
CORRECTION Dr suspense $70
Cr interest received $70
NOW BALANCE ON SUSPENSE ACCOUNT
Dr Cr
$ $
Balancing figure 210 to gas expense 180
Interest rec… 70 to discount allowed. 100Total 280 280
THE OPENING BAL.. ON SUSPENSE WAS $210 DebitThank you so much…
You welcome… So this June exams is it computer base or paper base? I paid for the exams online. So am having the exams on the 2,3,4 and 10. But am not sure whether it is computer or paper base examination.
@liljamz said:
You welcome… So this June exams is it computer base or paper base? I paid for the exams online. So am having the exams on the 2,3,4 and 10. But am not sure whether it is computer or paper base examination.I too have the exams on 2,3 ,4 and 10.I am appearing in MA1,MA2,FA1 and FA2 paper based exams.So weird you paid for exams and still don,t know they are paper or computer based?
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