Original balance on the suspense account (video below)
A suspense account was opened when a trial balance failed to agree. The following errors were later discovered.
- A gas bill of $1,680 had been recorded in the gas account as $960.
- A discount of $200 given to a customer had been credited to discounts received.
- Interest received of $280 had been entered in the bank account only.
What was the original balance on the suspense account?
Answer
| $ | $ | ||
| Balance | 840 | Gas bill (1,680 – 960) | 720 |
| Interest | 280 | Discount (2 x 200) | 400 |
| 1,120 | 1,120 |
Journal Entry and Adjusting Entry
| Transaction | Suspense Account & wrong entry | Adjusting Entry |
| Gas | Dr. Gas………………………… 960
Dr. Suspense Account…..720 Cr. Cash / Payable……………….1,680 |
Dr. Gas……………………720
Cr. Suspense Account…………720 |
| Discount allowed | Dr. Suspense Account…..400
Cr. Discounts received…………200 Cr. AR………………………………….200 |
Dr. Discount allowed…200
Dr. Discount received…200 Cr. Suspense Account………….400 |
| Interest | Dr. Bank………………………..280
Cr. Suspense account……………280 |
Dr. Suspense Account…280
Cr. Interest income…………….280 |
Note: if you cannot see any videos above, please click this link @ https://youtu.be/FIFPQwjJ2xo