The total of sales returns 8980$ is credited to purchase returns account. Make a suspense account to correct this error
Answer:
Sales Returns DR 8980$
Purchase Returns DR 8980$
Suspense Account CR 17960$
My question: Why is purchase returns account debited by 8980$? isn't purchase returns and sales returns account opposite? one is debit and other is credit, so it means due to the error purchase returns is already understated by 8980$ right? someone explain..
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FASuspense Account
3y ago#1Does this post help? https://opentuition.com/topic/suspense-accounts-and-journal-entries-2
Yes this cleared my doubt, thanks man.
Sorry I followed the link but I am still confused. If this question is broken down to steps:
1- If the original entry was an accidental credit to purchase returns then in order to balance, then shouldn't the suspense account be created with a debit of only 8980.
2- The correction to this is debit purchase return and credit suspense 8980.
The suspense account is now cleared?
When we now add a debit of 8980 to the sales return aren't we creating a balance on the suspense account again?
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