Question

An accountant found debit balance of suspense A/c Rs 2,700 while drawing Trial Balance. Following errors were subsequently found :
(1) Items of salary prepaid Rs 500 and Rent outstanding Rs 200 were omitted to be brought forward from last year.
(2) A bill received for Plant purchased Rs 5,000 and repair done to another plant Rs 500 from Ram were entered in the purchases book as Rs 4,500.
(3) Bought furniture for Rs 6,000 was wrongly debited to purchases A/c as Rs 600.
(4) Bought Machine from Gopi for Rs 10,000 was passed through purchases book as Rs 8,000.
(5) Old machinery sold for Rs 5,000 was credited to sales account as Rs 2,000.
(6) Goods worth Rs 1,000 were given as charity and goods of value Rs 2,000 were distributed as free samples for which no entry is made.
Rectify the above and prepare Suspense Account.​

Answer 1

Suspense Account: Debit 12,600 - Credit 21,500 = Credit 8,900.

Given : (1) Items of salary prepaid Rs 500 and Rent outstanding Rs 200 were omitted to be brought forward from last year.

(2) A bill received for Plant purchased Rs 5,000 and repair done to another plant Rs 500 from Ram were entered in the purchases book as Rs 4,500.

(3) Bought furniture for Rs 6,000 was wrongly debited to purchases A/c as Rs 600.

(4) Bought Machine from Gopi for Rs 10,000 was passed through purchases book as Rs 8,000.

(5) Old machinery sold for Rs 5,000 was credited to sales account as Rs 2,000.

(6) Goods worth Rs 1,000 were given as charity and goods of value Rs 2,000 were distributed as free samples for which no entry is made.

To find :

Rectify the above and prepare Suspense Account.​

Solutions :

To rectify the errors in the trial balance, the following adjustments should be made:

1. Add Rs 500 to the prepaid salary account and Rs 200 to the rent outstanding account
2. Subtract Rs 500 from the bill received for plant purchased and add Rs 500 to the repair done to another plant account
3. Subtract Rs 5,400 from the purchases account and add Rs 6,000 to the furniture account
4. Subtract Rs 2,000 from the purchases account and add Rs 10,000 to the machine account
5. Subtract Rs 3,000 from the sales account and add Rs 5,000 to the old machinery account
6. Add Rs 1,000 to the charity account and Rs 2,000 to the free samples account

The Suspense Account will be the net difference between the debit and credit adjustments, which in this case is:

Debit: 2,700 (original debit balance)

500 (prepaid salary)

200 (rent outstanding)

500 (plant purchased error)

5,400 (purchases error)

3,000 (sales error)

1,000 (charity)

2,000 (free samples)

= 12,600

Credit: 0 (original credit balance)

500 (plant repair error)

6,000 (furniture error)

10,000 (machine error)

5,000 (old machinery error)

= 21,500

Suspense Account: Debit 12,600 - Credit 21,500 = Credit 8,900.

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