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Suspense account

Forums › FIA Forums › FA1 Recording Financial Transactions Forums › Suspense account

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by secondstar.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 31, 2015 at 2:45 pm #279813
    hales
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Opening inventory of $31,763 had been entered on the credit side of trial balance as $31,673. The trial balance itself had been under cast on the debit side by $90.
    What net entry will be made in the suspense account to correct these errors?
    A) $63526 Dr.
    B) $63526 Cr.

    October 31, 2015 at 7:20 pm #279839
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    B) $63,526 Cr.

    Explanation:
    As the Debit Side is lesser than the Credit Side by $63,526, so a Suspense A/c is opened on the Debit Side of the Trial Balance.
    Now, after the identification of those errors, we’ll do the necessary rectification, which will definitely involve Suspense A/c.

    $31,673 is wrongly entered on the Credit side, so to remove it, we’ll make a debit entry of the same amount. Suspense A/c will be used for the double entry.
    Dr Trial Balance $31,673
    Cr Suspense Account $31,673

    Opening Inventory of $31,763 should have been put on the Debit Side, which isn’t. So, we’ll put it on the Debit Side of Trial Balance, and for the double entry we’ll use Suspense A/c.
    Dr Trial Balance $31,763
    Cr Suspense A/c $31,763

    Debit Side of Trial Balance is undercast by $90, so we’ll make a Debit entry of $90 to balance it. Again, Suspense A/c will be used for the double entry.
    Dr Trial Balance $90
    Cr Suspense A/c $90

    These entries will balance the Suspense A/c, meaning it will have a ‘nil’ balance, and hence it’ll be removed from the Trial Balance.

    November 1, 2015 at 10:18 am #279888
    hales
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Ok thank you. But what if the question was that ‘What was the original balance on the suspense account’? Then what would be the answer?

    November 1, 2015 at 3:52 pm #279947
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    It would be
    A) $63526 Dr.

    As after the extraction of Trial Balance, we found that the Debit Side is lesser than the Credit Side by the above amount. So, we made a Suspense A/c on the Debit Side to balance the Trial Balance. Hence the opening balance on the Suspense A/c would be $63526 Dr.

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