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Hi Mr Moffat. Please explain. The trial balance of c a limited liability company did not agree and a suspense account was opened for the difference checking the bookkeeping system number of errors.
1. $4600 paid for motor van repairs was correctly treated in the cash book but was credited to motor vehicles asset account
2. $360 received from b a customer was credited in error to the account of bb
3. $9500 paid for rent was debited to the rent account as $5900
4. The total of the discount allowed column in the cash book had been debited in error to the discounts received account
5. No entries have been made to record a cash sale of $100
Which of the above would require an entry to the suspense account? The answer is 1 and 3. Why do 2 and 4 not require suspense account entries? I don’t understand how they differ from 1 and 3Entries are only needed in a suspense account if the debit did not equal the credit (and therefore the trial balance does not balance).
In 2, an item has been entered in the wrong account, but the debits will still equal the credits.
In 4, the amount has been debited to the wrong account, but it is correct to have a debit.
(In 1, they have two credits – not a debit and a credit; in 3 the debit is of the wrong amount (and therefore different to the credit); in 5 there are not entries at all, so no debit and no credit)
I do suggest that you watch our free lecture on this (our lectures are a complete course for Paper F3 covering everything needed to be able to pass the exam well).
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