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Hi there, I am confused with this question and would be very grateful for help.
Question: On further investigation of the suspense account it was discovered that a cash receipt of £18,000 had been posted to the suspense account. This represents the proceeds from the disposal of a piece of equipment that had been bought exactly two and a half years ago at a cost of £22,000. The equipment was sold on the last day of the financial year.
I am trying to prepare a income statement (statement of profit and loss). Looking at the information i have on the Trial balance it is showing suspense account (under credits) £18,000. How do i work out what goes on the statement of profit and loss and what goes on the balance sheet? Hope this makes sense.
Many thanks in advance
The 18,000 is the proceeds of sale of equipment, but they have not recorded the sale properly.
So you need to make the normal entries for the sale of a non-current asset, and then transfer the balance on the suspense account to the disposal account (Dr suspense, Cr disposal), where it should have been entered in the first place 🙂
(If you have forgotten the entries for the disposal of non-current assets, then do watch my free lectures on it.)
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