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Hallo,
In the example: :The receipt of $270 from a customer has been debited to their account in the sales ledger.”
– there is no need to use a suspense a/c to correct the error, and I don’t know why? Is it because only one a/c is involved? But when correcting, we will have Dr ??? 540 Cr Sales ledger 540. Isn’t the Dr ??? – the suspense a/c, or there is no need of Dr, but it can’t be without a Dr?
Thank you!
Sorry, maybe I haven’t understood correctly, the answer says:
As control accounts are maintained, this is not part of the double-entry system.
– so, does this mean we use a suspsence a/c?
Thank you!
Because, if we compare to the below example, in which a suspense a/c is used, and if in the 1st example we don’t use a suspense a/c, then I don’t understand what is the difference between the two examples?
The second example says:
Correction of error in posting $24,000 cash received for rent to the rent received account as $42,000.Dr Rent received account 18,000
Cr Suspense account 18,000If we follow this second example to solve for the 1st example, then I would say for the 1st example:
Dr Suspense a/c 540
Cr Receivable (customer) a/c 540– so I still don’t know if that’s correct for the 1st example or not, including the statement for it: “As control accounts are maintained, this is not part of the double-entry system.”
Thank you!
The sales ledger (receivables ledger) is where there are individual accounts for each customer. Usually this is not part of the double entry. We keep the records simply for practical reasons (we need to be able to find out at any time how much each customer owes us).
However, the actual double entry when we make sales on credit is to debit the Receivables Ledger Control Account (i.e. total receivables account) and credit the Sales Account. (Both accounts being in the nominal (or general ledger).
So…..because the sales ledger is just a note and not part of the double entry system, the balances do not appear on the trial balance and therefore any errors there do not stop the trial balance balancing (and therefore do not affect any suspense account).
It really would help you to watch my lecture on books of prime entry, where all of this is explained.
It’s good to know that they are not part of the double entry, because from another side they also have a debit and a credit side of the account, and as I hadn’t known that, this confused more.
I’ll check the lecture.
Thank you!
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