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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.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 $31,673Opening 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 $31,763Debit 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 $90These entries will balance the Suspense A/c, meaning it will have a ‘nil’ balance, and hence it’ll be removed from the Trial Balance.
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?
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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