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Hi John
The trial balance of Z failed to agree, the totals being: debit $836,200
credit $819,700
A suspense account was opened for the amount of the difference and the following errors were found
and corrected:
1 The totals of the cash discount columns in the cash book had not been posted to the discount
accounts. The figures were discount allowed $3,900 and discount received $5,100.
2 A cheque for $19,000 received from a customer was correctly entered in the cash book but was
posted to the control account as $9,100.
What will be the remaining balance on the suspense be after the correction of these errors?Correct answer is $1,500 credit.
But my answer is $21,300 debit.I think
Suspense account
Opening balance 16,500 credit
Discount received 5,100 debit
Transposition of cash 9,900 credit
Balance remaining 21,300 debit.Why transposition of cash received should be debited?
They have debited with $9,100, so they are missing debit of $9,900. So I credit the suspense account with $9,900.
According to the question, they have correctly debited the cash book with 19,000.
It is the control account that is wrong – they should have credited it with the cash received of 19,000, but they have only credited it with 9,100.Therefore they are missing a credit of 9,900 and need to debit the suspense account.
I thought
They should have debited cash received of $19,000 in control account, bit they have only debited it with 9,100.Why cash received should be credited? Cash received means increase of asset, so my confusion come from here.
When you receive cash from receivables, the correct double entry is to debit cash (an increase in an asset) and credit the receivables control account (a decrease in an asset).
Here, the have debited cash with the correct amount, but they have credited the control account with the wrong amount.
I do suggest that you watch my free lectures. They are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
Hi John,
I am confused by the definition “remaining balance” and “balance”
According to the T-acc of the suspense account,
Suspense account
Opening balance 16,500 credit
Discount received 5,100 debit
Transposition of cash 9,900 debit
=> I thought the Balance would be 1500 DebitThank you very much
The remaining balance is the balance left on the account after making the correcting entries.
I assume that you have checked your answer with that in your Revision Kit?
sir so the answer is:
1. Dr suspense 900
Cr sales 900
2. Dr suspense 9900
Cr receivable 9900
difference between debit and credit = 836200 – 824700 = 11500 DRSo shouldnt it be 11500 DR + DR Suspense 900 + DR suspense 9900 = 22300 DR??
why is the answer 1500 CR?I have no idea where your entry 1 has come from.
The starting balance on the suspense account is a credit balance of 836,200 – 819,700 = 16,500.
To correct for the the wrong posting of 9,100 we debit the suspense with 9,900.
To correct for the discount allowed, we credit the suspense with 3,900.
To correct for the discount received, we debit the suspense with 5,100.
Therefore the balance left on the suspense account is a credit balance of $5,400.
The answer is not $1,500 (but I was not asked about that before – only about the cheque received).
Either seolinmin copied the question wrongly from the BPP Revision Kit, or is using an old edition which maybe had a typing error. In the current edition of the Revision Kit there is no mention of the discount allowed of $3,900 and without that error the balance on the suspense account would end up as $1,500 credit.
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