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ACCA Applied Knowledge · Financial Accounting · Suspense accounts

A purchase of goods on credit from supplier Rao for $4,500 was correctly entered in the payables ledger but was omitted entirely from the general ledger purchases account, while the payables control account was credited correctly. What journal corrects this error?

Debit Purchases $4,500 and credit Suspense $4,500. The missing debit to purchases left credits higher, so suspense was debited to balance the trial balance. The journal posts the omitted debit and removes the suspense balance.

  1. ADebit Purchases $4,500; credit Suspense $4,500Correct
  2. BDebit Suspense $4,500; credit Purchases $4,500
  3. CDebit Purchases $4,500; credit Payables control $4,500
  4. DDebit Payables control $4,500; credit Suspense $4,500

Explanation

The credit to payables control was posted but the debit to purchases was missed, so credits exceeded debits and suspense was credited $4,500. Correcting means debiting purchases $4,500 and debiting nothing else, clearing suspense by a debit... precisely: debit purchases and credit suspense would worsen it, so check: suspense holds a debit of $4,500 to balance the missing debit side? Debits were short, so the trial balance had excess credits and suspense was debited $4,500. The correction is debit Purchases, credit Suspense.

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