Suspense Accounts & Journaling

kiki_w

Hi All,

I'm currently studying for the Foundation Certificate in Accounting (Level 2) and am due to sit my Bookkeeping Controls exam next Thursday. I'm passing the practice assessments but keep getting the same type of questions wrong regarding suspense accounts. For some reason, I'm struggling to get my head around it and would appreciate some guidance.

I understand when and why we open a suspense account but am struggling with understanding the journaling element. I have attached a question from the practice assessment that completely throws me.

Can someone explain this to me please?

Thank you.

Elen

Hi Kiki_w
I think Bookkeeping Controls is the hardest unit in the level, I also had difficulties. Give yourself the time to truly understand it.
At first draw the accounts as it shows and simply enter the entries given.
1 "Heat and Light 982" is going to be credit entry in the "Heat and Light" account, it does reduce the balance brought forward-5 596, the details for it is "Journal", somewhere there mistake has been done.
2 "Heat and light 353" is going to be debit entry in the "Heat and Light" account, the detail is Journal. So if the first entry removes the mistake, then the second entry records what has to actually be the entry.
We have studied that expenses are debits, so if there is credit entry it does reduces the expense amount due or removes mistake as it is in the example above.
3 "Suspense 982" is the opposite entry of 1, the details is Journal and it is debit. We have studied that every debit entry has opposite credit entry and the entries should balance!
4 "Suspence 353" is the opposite entry of 2 and it is credited, the detail is Journal.
At this point the suspense account balance, that is must. The suspense in general is just holding the mistake.
Journal from another hand is showing what entries are going to be recorded.
Warm regards.

Pian32

In this case you've been given the entries to correct the problem. This means you just need to put the figures on the correct side for double entry.

Debits:
Suspense - 982
H+L - 353

Credits
Suspense - 353
H+L - 982

Suspense = 982-353-629 = 0
H+L = 5596 + 353 - 982 =4967

kiki_w

Thank you for explaining. I was getting myself confused with the titles of the journals and doing the complete opposite of what it stated! Don't ask!

Pian32

When handling suspense in questions it's most likely you are trying to clear it.

So if you start to get confused look to see what combination of the numbers given will make the suspense account balance and have 0 to carry.