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

The trial balance of Gupta & Co. shows total debits of Rs 4,86,200 and total credits of Rs 4,82,700, and the difference was placed in the Suspense Account. Later, it was found that a sale of Rs 3,500 to Ravi was entered correctly in the Sales Book but was not posted to Ravi's account. What is the rectifying entry?

Debit Ravi's account and credit the Suspense Account with Rs 3,500. The omitted debit posting to the customer made credits fall short of debits, so suspense held a credit balance. Posting the missing debit to Ravi and crediting suspense clears the suspense account completely.

  1. ADebit Ravi's account Rs 3,500; Credit Sales account Rs 3,500
  2. BDebit Suspense account Rs 3,500; Credit Ravi's account Rs 3,500
  3. CDebit Ravi's account Rs 3,500; Credit Suspense account Rs 3,500Correct
  4. DDebit Ravi's account Rs 3,500; Credit Suspense account Rs 7,000

Explanation

Debits exceed credits by Rs 3,500, so the suspense account has a credit balance of Rs 3,500. The omitted debit to Ravi is posted now: Debit Ravi, Credit Suspense Rs 3,500. This clears the suspense account to nil. Crediting Sales again would double the sales already recorded.

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