ACCA Applied Knowledge · Financial Accounting · Suspense accounts
A trial balance did not agree, and the difference of $900 was debited to a suspense account. Investigation showed that a purchase of $450 from a supplier on credit was posted to the debit of the purchases account and also to the debit of the supplier's payables account. What is the effect of correcting this error on the suspense account?
Suspense is credited with $900. The purchase was debited twice, so the credit side was short by double the $450. The correcting entry credits payables $900, and the suspense account balance of $900 debit is cleared by an equal credit.
- ASuspense is credited with $900Correct
- BSuspense is debited with $900
- CSuspense is credited with $450
- DSuspense is debited with $450
Explanation
A debit-debit posting leaves total credits short by $900 (2 x $450), so suspense was debited with $900. Correction: Cr payables $900 (removing the wrong debit of $450 and adding the missing credit of $450). Hence the correction clears the suspense by a credit of $900. Crediting $450 would only fix one side.
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