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the suspense account shows a debit balance of $100.what could this balance be due to ?
A entering $50 received from A Turner on the debit side of A Turner’s account
B entering $50 received from A Turner on the credit side of A Turner’s account
C undercasting the sales day book by $100
D undercasting the purchases account by $100I dont understand :
– How to do the double entries for A. is it Debit cash (since we receive the money frm A Turner) so it should be credit the amount to A turner instead of debitting it ?
– why is B wrong?
– i know undercast means making the amount lower than what it should be. but im not sure what is the double entry for C and D. Mr john can you explain it ?A and B will not affect the trial balance because they refer to entries in the receivables ledger which is not part of the double entry.
C is wrong because although the total of the sales day book is wrong, the same total will have been posted to both the sales account and to the receivables account. Therefore the trial balance will still balance.
D is correct because the purchases account does appear on the trial balance. The purchases account is a debit balance and if it has been undercast then the debit balance is $100 lower than it should be. This means that the total of the debit balances on the trial balance is $100 too low, and therefore a debit balance is needed on the suspense account.
All of this is explained in my free lectures on Books of Prime Entry and on Suspense Accounts.
but mr john, can you just explain, when a customer ( eg. A turner) receive money are we supposed to credit or debit his account ? (for A and B)
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