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Hi,john.
$960 paid for plant maintance has been correctly entered in the cash book and credited to the plant asset account.
what suspense account should do to adjust this error ?There are two mistakes here.
One is the plant maintenance is an expense and so should not have been entered in the asset account.
However, simply entering in the wrong account would not stop the trial balance balancing.But the other mistake, is that when we pay we CR cash and therefore the other entry should be to DR an account. Here the have credited an account – they have had two credits.
So….to correct it we need to DR asset account (because it should not be there) and we also need to DR expense account (because that is where it should be).
Then everything will be OK.
So………because it was correcting an out of balance – we CR the suspense account for both. i.e. CR suspense account with a total of 1920 (2 x 960)
Hope that helps 🙂
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