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Remaining balance in Suspense Account

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Remaining balance in Suspense Account

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • Author
    Posts
  • November 7, 2023 at 3:31 pm #694516
    aamna808
    Participant
    • Topics: 24
    • Replies: 9
    • ☆

    When Q’s trial balance failed to agree, a suspense account was opened for the difference. The trial balance
    totals were:
    Debit $864,390
    Credit $860,930

    The following errors were found:
    1 In recording an issue of shares at par, cash received of $333,000 was credited to the ordinary share capital account as $330,000.
    2 Cash $2,800 paid for plant repairs was correctly accounted for in the cash book but was credited to the plant asset account.
    3 The petty cash book balance $500 had been omitted from the trial balance.
    4 A cheque for $78,400 paid for the purchase of a motor car was debited to the motor vehicles account as $87,400.

    What will the balance on the suspense account be after making the necessary entries to correct the
    errors affecting the suspense account?
    A $2,440 Debit
    B $15,560 Credit
    C $13,640 Debit
    D $3,440 Debit

    I have a credit balance in my suspense account of $2,440 and I have checked all my entries with the answer in the BPP Kit. All my entries in the suspense T account are correct but the answer is $2,440 Debit. I have experienced this with some other suspense account questions as well where I would have a Debit or Credit Balance ‘remaining’ in the suspense accounts or ‘balance on the suspense account after making the corrections’, all entries matched with the answer, but the correct answer would have the opposite Dr or Cr entry than what I have calculated. What is the difference between ‘remaining balance’ and ‘balance on suspense account after corrections’? Can you please help me understand what error I’m making here, my exam is on Thursday and I am really freaked out. Thank you in advance:(

    November 8, 2023 at 8:47 am #694537
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54675
    • ☆☆☆☆☆

    Although the ‘balancing’ figure on the suspense account is 2,440 on the credit side, as always we carry this forward to the opposite side meaning that we end of with a debit balance.

    To explain in a different way, your suspense account should have started with a credit balance of 3,460. You will have credited with 5,600 and with 500, and will have debited with 3,000 and with 9,000 in order to correct the errors.

    So the debit side will total 12,000 and the credit side will total 9,560.

    Therefore there is a net debit on the account of 12,000 – 9,560 = 2,440.

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