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Suspense account

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Suspense account

  • This topic has 3 replies, 2 voices, and was last updated 9 months ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • May 4, 2022 at 9:16 am #654907
    hymian
    Member
    • Topics: 3
    • Replies: 2
    • ☆

    Jamie’s Cars have a balance on their suspense account of $324 debit.
    Which TWO of the following could independently of each other explain this?
    A Cash sales of $162 debited to the sales account, but correctly recorded in cash
    B An invoice for materials for $324 debited to wages, but correctly recorded in trade payables
    C Omitting the discounts allowed account of $324 from the trial balance
    D Rent paid of $162 credited to the rent account, but correctly recorded in cash

    Hello sir, can u explain this? The answer is C and D, but I don’t understand:
    – Why is A wrong? The correct entry for A should be Dr Cash Cr Sales, but only the entry for cash is correctly recorded so to correct the sales entry we should credit twice to sales account and debit twice to suspense account, which is equal to $324 debit balance in suspense account, isn’t it?

    May 4, 2022 at 2:59 pm #654935
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51556
    • ☆☆☆☆☆

    At the moment there is a debit balance on suspense because at the moment the total credits are greater than the total debits.

    If sales have been debited instead of credited then this would have made the total debits higher than the total credits.

    To correct the mistake we would Cr Sales and Dr Suspense account, but this would then make the balance on the suspense account 648 Dr. After correcting the errors the balance on the suspense account must be zero.

    Have you watched my free lectures on suspense accounts?

    May 5, 2022 at 6:05 am #654950
    hymian
    Member
    • Topics: 3
    • Replies: 2
    • ☆

    Thanks for reply! Yes, I have finished watching all lectures.

    May 5, 2022 at 6:37 am #654954
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51556
    • ☆☆☆☆☆

    You are welcome 🙂

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