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CMA Foundation · Fundamentals of Financial and Cost Accounting · Trial Balance

A trial balance showed credit total Rs 2,10,000 and debit total Rs 2,04,000, and the difference was put to Suspense. Later it was found that (i) Rs 5,000 received from a debtor was credited to his account but not entered in the Cash Book, and (ii) the Sales Book was overcast by Rs 1,000. After rectification, what is the position of the Suspense account?

The Suspense account becomes nil. The Rs 6,000 shortfall on the debit side is fully explained by the missing Rs 5,000 cash debit and the Rs 1,000 overcast in Sales, so both rectifications clear it.

  1. ANil, as the net effect of the errors equals Rs 6,000Correct
  2. BDebit Rs 6,000 balance still remaining
  3. CCredit Rs 1,000 balance still remaining
  4. DDebit Rs 1,000 balance still remaining

Explanation

The difference of Rs 6,000 is a debit shortfall, so Suspense is debited Rs 6,000. Omitting the cash receipt left debits short by Rs 5,000; overcast sales left credits too high by Rs 1,000. Total Rs 6,000 is explained, so Suspense is cleared with credits of Rs 5,000 (Cash) and Rs 1,000 (Sales).

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