Suspense account question

Tabitha005 Registered Posts: 9
Hello, this is my first post, with what I suspect is a really dumb question, but I've been sitting here thinking about it for half an hour, so I need some help understanding.

When the trial balance is imbalanced, necessitating the opening of a suspense account, how do you know which side of the trial balance is incorrect? I know the suspense account should be debited or credited depending on which side of the trial balance is LOWEST, but why does it then follow that the higher side of the TB is the CORRECT figure?

Does this even matter? Am I confusing myself in ways I need not think about?


  • CSan89
    CSan89 MAAT Posts: 207
    Suspense account tends to only exist in computerised accounts because the double entry has gone wrong somewhere. You can use either side of it and is basically the balancing figure of the trial balance.
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  • Tabitha005
    Tabitha005 Registered Posts: 9
    Hi, and thanks for your reply. Something's definitely not clicking for me on this one and I can't seem to 'get it'.

    For example, on the mock assessment I'm doing at the moment there's this question;

    "A suspense account has been opened with a balance of £600.

    The error has been identified as an entry made in the general ledger from the sales returns day book shown below. The total of the net column had been totalled incorrectly.

    Extract from the sales returns day book
    Details Total £ VAT £ Net £
    Totals 6,600 1,100 4,900

    (a) Prepare the journal entries to:
    - Remove the incorrect entry
    - Record the correct entry
    - Remove the suspense account balance".

    How do I know on which side of the trial balance the suspense account appears?
  • Neillaw
    Neillaw New Member RossendaleMAAT, AAT Licensed Accountant Posts: 281
    Does anyone actually use a sales return book or is this something the examiners made up?

    The invoice is short by £600, due to the vat being correct I would transfer the suspense account balance against turnover. This would be a debit in turnover due to it being a stock return.

    Dr - Turnover
    Cr - Suspense account.

    You will know the suspense account side by working it back from the sales return - this points me in the direction of a sales credit note hence the Dr to turnover.
  • Tabitha005
    Tabitha005 Registered Posts: 9
    Thanks for your response. I've answered the question as follows;

    Journal to remove incorrect entry;
    CR sales returns day book £4,900

    Journal to record the correct entry;
    DR the sales returns day book £5,500

    Journal to remove the suspense a/c bal;
    CR suspense account £600

    Does that look right to you?
  • EM12345
    EM12345 Registered Posts: 12
    Hi. In answer to your question as to how you know which side the suspense account appears. I would approach the question by looking at what should have happened:
    DR Sales Returns £5500
    Dr VAT £1100
    CR SLCA £6600
    Then look at what has happened:
    DR Sales Returns £4900
    DR VAT £1100
    CR SLCA £6600
    From here you can see that the suspense entry must be a £600 DR as debits and credits have to balance.

    Your answers are correct.
    Hope that helps
  • Tabitha005
    Tabitha005 Registered Posts: 9
    Thank you so much - that makes the situation much, MUCH clearer!
  • mcmc
    mcmc Registered Posts: 7
    Hi, I can understand how it looks like the higher side is correct, but higher or lower is irrelevant, most of the time, neither side is correct. What the opening balance of the suspense account does tell you is the total difference between debits and credits on the TB - or the net value of all the mistakes on the trial balance. To give you an extreme example, a £400 Cr opening balance on a suspense account would be cleared by a £100,400 debit entry to suspense to correct one mistake and a £100,000 credit entry to correct another. These corrections would not only clear the suspense account, but the opposite balancing entries (£100,400 Cr, £100,000 Dr) would raise both the debit and the credit side of the trial balance by £100,000.. so you can see how the original incorrect balances are irrelevant. Think of the suspense account opening balance as the starting point.. it's just telling you the net value of all the mistakes on the TB.
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