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
| SUSPENSE ACCOUNT | |||
| $ | $ | ||
| 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. Gas……………………720 |
| Dr. Suspense Account…..720 | Cr. Suspense Account…………720 | |
| Cr. Cash / Payable……………….1,680 | ||
| Discount allowed | Dr. Suspense Account…..400 | Dr. Discount allowed…200 |
| Cr. Discounts received…………200 | Dr. Discount received…200 | |
| Cr. AR………………………………….200 | Cr. Suspense Account………….400 | |
| Interest | Dr. Bank………………………..280 | Dr. Suspense Account…280 |
| Cr. Suspense account……………280 | Cr. Interest income…………….280 |