- This topic has 1 reply, 2 voices, and was last updated 2 years ago by
.
-
Posts
-
Question: The suspense account shows a debit balance of $100. What could this balance be due to? A Entering $50 received from A Turner on the debit side of A Turner’ s a/c. B Entering $50 received from A Turner on the credit side of A Turner’ s a/c. C Undercasting the ales day book by $100. D Undercasting the purchases a/c by $100.
The answer is D, but isn’t to debit purchases by $100, and suspense account shows a credit balance of $100?
The correcting entry is as you have written – debit purchases and credit suspense account.
However the answer is D, and I will explain in two ways.
Before correcting the entry there is a debit missing on purchases. So the total of the debit balances will be lower than the credit balances, which will mean having a debit entry in the suspense account to make it balance.
Alternatively (although the same logic), when everything is correct there will be no balance on the suspense account. At the moment there is a debit balance and so crediting the suspense account will result in a zero balance.
- You must be logged in to reply to this topic.