TRIAL BALANCE CORRECTIONS

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CAN ANYONE PLEASE OFFER ANY ADVICE ON HOW TO REMEMBER HOW TO TO JOURNAL CORRECTIONS WHEN ITEMS DO NOT AFFECT THE TRIAL BALANCE TOTALS - AND WHEN A SUSPENSE ACCOUNT IS NEEDED WHEN ERRORS DO AFFECT THE TRIAL BALANCE TOTALS<BR>THANK YOU

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TRIAL BALANCE CORRECTIONS

Hiya Loris<BR><BR>A suspense account is only needed when it's not obvious where the problem lies. You create a suspense account and put the "offending" balance there so that your trial balance balances. Later, you can investigate and balance off your corrections against the suspense account.<BR><BR>When it comes to corrections that do not affect the trial balance, you use the journal in the same way, but , instead of one entry being "Suspense Account", it is the other account involved.<BR><BR><b>Suspense Account</b><BR>Say that you entered purchases as £132 instead of £123, which is a common mistake. Your trial balance will not balance. You will have a credit balance of £9 in the suspense account. As no other accounts are involved, the journal entries to correct this would be: Dr Suspense £9 (thus clearing the suspense account); Cr Purchases (correcting the mistake).<BR><BR><b>Non-Suspense Account</b><BR>It may be that you've entered the £123 as a debit in Sales instead of Purchases by mistake. Here, the journal does not involve the suspense account. You would Dr Purchases £123 (correcting purchases); Cr Sales £123 (correcting sales).<BR><BR>Hope this helps.<BR><BR>Mike<BR>