error and suspense account

meibaker

Q: a business has just drafted its trial balance and the debit balance exceeds the credit balance by£1370, a suspense account has been set up to recored the different
a) the discounts allowed from the cash receipts book of £240 have not been posted to teh main ledger
b)a purchases invoice for £480 was entered into the purchases day book as £580.
c)the sales ledger column in the cash receipts book totalling 2700 were not posted to the SLCA.
d)the wages account of 74,275 was included in the trial balance as 72,475.
e)bad debts written off for 235 was debited to SLCA and debited to the bad debts expense account.
A: SLC 2,700 BALANCE 1,370
SLC 470 WAGES 18,00

I DON'T UNDERSTAND WHY A) AND ARE NOT INCLUDED IN THE SUSPENSE ACCOUNT? PLEASE SOMEONE EXPLAIN TO ME PLEASE
MANY THANKS

Rachey

meibaker wrote: »

Q: a business has just drafted its trial balance and the debit balance exceeds the credit balance by£1370, a suspense account has been set up to recored the different
a) the discounts allowed from the cash receipts book of £240 have not been posted to teh main ledger
b)a purchases invoice for £480 was entered into the purchases day book as £580.
c)the sales ledger column in the cash receipts book totalling 2700 were not posted to the SLCA.
d)the wages account of 74,275 was included in the trial balance as 72,475.
e)bad debts written off for 235 was debited to SLCA and debited to the bad debts expense account.
A: SLC 2,700 BALANCE 1,370
SLC 470 WAGES 18,00

I DON'T UNDERSTAND WHY A) AND ARE NOT INCLUDED IN THE SUSPENSE ACCOUNT? PLEASE SOMEONE EXPLAIN TO ME PLEASE
MANY THANKS

a) Is an omission, it hasnt even entered the trial balance. So if it hasnt entered the trial balance then it wont effect it, and consequently wont be in the suspense account.

b) If it was entered in the purchases day book incorrectly then it would have then been entered into the ledgers incorrectly. But as the SAME figure was used then the ledgers would still balance, and not effect the trial balance.

For example, if it said in b) that it was £480 in the purchases account but £580 in the creditors account then that would cause an imbalance in the trial balance, so the difference of £100 would go in the suspense account. But the question says the error was in the day book, so £580 was posted in all accounts, NOT causing an imbalance. So the T Accounts just need amending to the correct figures.

Hope this helps!!

meibaker

Thanks so much for your reply. Much approciated!

Rachey

No probs, thats what were here for!! :-)