Suspense Account of the MCO

Assalamualaikum and dear students,

Since we are still in the MCO, here is the suspense exercise. I hope you can attempt this question as the solution I will post later in the same posting.

Stay home and don't go wandering around. Just sit tight and do this exercise. It is for your own good!.

Exercise 4 - Error and suspense account - BELLA

BUS2231 Assignment

Finally, the assignment has arrived. As usual, in a group of FOUR or a minimum TWO. Please be reminded the submission date will be on the 12th March 2020. Handwritten or preferably type. Late submission will not be entertained!.

So here is the assignment.

Good luck!

Suspense Account - The Video

Assalamualaikum and dear students

This video was taken during the foundation class held at the college recently. It is very useful for those who are now studying this topic. Well it is an important topic and when I say it is important than it is VERY IMPORTANT! Hehe.

As it is in the video, so you guys can play this over and over again..... So please, read the notes regarding the suspense account and watch the video.

BUS 2231 - Exercise - Suspense Account

This maybe the last suspense exercise for the semester.....mostly debit and credit for all transactions;

1. Sales on credit to Mr Ahmad RM2,000
2. Payment of rental by cheque to Fadhil Realty RM3,000
3. Electricity expenses were accrued by RM100
4. Salary was prepaid by RM1,000
5. Sales were understated by RM500
6. Purchases were over-recorded by RM800
7. Sales to Mohamad RM300 was recorded in Mohamed's account
8. Payment from Rita RM200 was totally omitted from both books
9. Discounts allowed given to Tesco RM50 was wrongly recorded as discount received.
10. Payment to Rudaini RM1,000 was recorded as RM100 in Rudaini's account
11. Rental payment made to Ali RM2,500 was omitted in the rental's account.
12. and..... how about treating with some cold drinks? Can I put as accrued drinks to me?

hehehe

BUS2231 - Exercise - Suspense Account

Assalamualaikum and dear students,

Attached is the exercise for Suspense Account. Download the file and we shall discuss it in class.

I'm thinking of giving this as your other Quiz as well

BUS2231 - Exercise - Suspense Account - Syazwani

Suspense Account – Exercise 3

Due to high demand of those who wanting the suspense account exercise, so here it is…. and Happy New Year!

Maziah’s trial balance for the month of June 2016 did not balance, the total credits exceeding the total debits by RM1,778 which he had to create a suspense account. However, on 4 July 2016, she discovered the following errors;

• A balance of RM80 on a trade receivables’ account has been omitted from the schedule of trade receivables.
• The receipts side of the cashbook had been under-cast by RM520.
• The total of sales recorded was RM9,154 instead of the correct figure of RM9,514.
• The payment to a creditor of RM179 was posted to the wrong side of his account.
• Purchases was under-cast by RM730.
• Payment from Wahab RM200 was recorded into Wahob’s account.
• A Payment RM450 received from Abbas, the debtor, was credited in the debtor’s account but was not recorded in the bank account.
• Motor vehicle maintenance of RM700 was recorded in the motor vehicle account.

Required:

1. Prepare journal entries to correct the above errors.
2. Draw the suspense account.

Suspense Account - Warming up

DO NOT THINK this is the final exam questions. Just attempt this to enhance and sharpen your skills.

SUSPENSE ACCOUNT

Balance as per trial balance RM2,400 (Dr)

1. Sales were undercast by RM800
2. Remittance of RM1,700 received from Ali, a debtor, was mistakenly credited in a creditor’s account, also by the name of Ali
3. Purchased from Mydin RM3,600 and no records have been found in any of the books
4. Payment of electricity to Pos Malaysia RM120 cash was posted as RM210 in the expenses ledger
5. Purchases were overcast by RM1,000
6. Discounts received of RM450 was posted into a discounts received account
7. Depreciation of a machine of RM1,000 was omitted in the expense account
8. Payment of cheque to Ahmed RM1,500 was recorded in Ahmad’s account
9. Payment of wages to part timers RM900 was recorded as RM600 in wages account

The net profit for the year was recorded as RM27,410.

Required:

1. Journal entries for each of the transaction
2. Suspense accounts

Statement of corrected net profit for the year.

ACC2231 - Suspense Accounts - Revision

Assalamualaikum and dear students,

Attached is some exercises regarding the suspense accounts for you to do. I haven't really look into the answers but we shall solve them together later in class. Why not ar?

Exercise 6 - Suspense Account - Single

ACC2231 - Error and Suspense Account (Exercise 3)

See? I think that's enough for now....

Examples	Correcting journal entries
	$
A credit sale of $150 to Mr. Chan has been omitted from his account.
A sale to C. Lee for $250 was correctly entered in the sales book but entered in C. Lee’s account as $520.
A credit sale of $100 has been credited to H. Cheung’s account
Sales day book was overcast by $200
Sales account was undercast by $40
The total of the sales account of $1,500 has been omitted from the trial balance
The total of the sales account of $1,500 has been extracted as $1,200 in the trial balance.
The total of the sales account of $1,500 has been extracted to the debit column of the trial balance

ACC2231 - Error and Suspense (Exercise 2)

Again? Well, this the road to final.....

Show the journal entries necessary to correct the following errors: (Narrations are not required)

1. A sale of goods $678 to H. Luen had been entered in H. Lui’s account.
2. The purchase of a machine on credit from L. Po for $4,390 had been completely omitted from our books.
3. The purchase of a motor van $3,800 had been entered in error in the motor expenses account.
4. A sale of $221 to C. Fat had been entered in the books, both debit and credit as $212.
5. Commission received $257 had been entered in error in the sales account.

ACC2231 - Suspense Account (Exercise 1)

I believe you guys have read all the notes given. And I know that you can't wait to try this question and you may ask for more, hehe. Let's start by doing this... You may highlight this documents and paste it to MsWords.

The bookkeeping system of Turner is not computerised, and at 30 September 20X8 the bookkeeper was unable to balance the accounts. The trial balance totals were:

Debit $1,796,100
Credit $1,852,817

Nevertheless, he proceeded to prepare draft financial statements, inserting the difference as a balancing figure in the statement of financial position. The draft statement of profit or loss showed a profit of $141,280 for the year ended 30 September 20X8.

He then opened a suspense account for the difference and began to check through the accounting records to find the difference. He found the following errors and omissions:

1. $8,980 – the total of the sales returns book for September 20X8, had been credited to the purchases returns account.
2. $9,600 paid for an item of plant purchased on 1 April 20X8 had been debited to plant repairs account. The company depreciates its plant at 20% per annum on a straight line basis, with proportional depreciation in the year of purchase.
3. The cash discount totals for the month of September 20X8 had not been posted to the general ledger accounts. The figures were:
   Discount allowed $836
   Discount received $919
4. $580 insurance prepaid at 30 September 20X7 had not been brought down as an opening balance
5. The balance of $38,260 on the telephone expense account had been omitted from the trial balance
6. A car held as a non-current asset had been sold during the year for $4,800. The proceeds of sale were entered in the cash book but had been credited to the sales account in the general ledger. The original cost of the car $12,000, and the accumulated depreciation to date $8,000, were included in the motor vehicles account and the accumulated depreciation account. The company depreciates motor vehicles at 25% per annum on a straight line basis with proportionate depreciation in the year of purchase but none in the year of sale.

Required:
(a) Open a suspense account for the difference between the trial balance totals. Prepare the journal entries necessary to correct the errors and eliminate the balance on the suspense account. Narratives are not required. (10 marks)
(b) Draw up a statement showing the revised profit after correcting the above errors. (6 marks)

Total (16 marks)

Source: ACCA

ACC2231 - Suspense Account (Revision)

SUSPENSE ACCOUNTS AND ERROR CORRECTION

RELATED LINKS

• Student Accountant hub

Suspense accounts and error correction are popular topics for examiners because they test understanding of bookkeeping principles so well

A suspense account is a temporary resting place for an entry that will end up somewhere else once its final destination is determined. There are two reasons why a suspense account could be opened:

1. A bookkeeper is unsure where to post an item and enters it to a suspense account pending instructions
2. There is a difference in a trial balance and a suspense account is opened with the amount of the difference so that the trial balance agrees (pending the discovery and correction of the errors causing the difference). This is the only time an entry is made in the records without a corresponding entry elsewhere (apart from the correction of a trial balance error – see error type 8 in Table 1).

Types of error

Before we look at the operation of suspense accounts in error correction, we need to think about types of error – not all types affect the balancing of the records and hence the suspense account. Refer to Table 1.

Table 1: Types of error

Error type		Suspense account involved?
1 Omission – a transaction is not recorded at all		No
2 Error of commission – an item is entered to the correct side of the wrong account (there is a debit and a credit here, so the records balance)		No
3 Error of principle – an item is posted to the correct side of the wrong type of account, as when cash paid for plant repairs (expense) is debited to plant account (asset) (errors of principle are really a special case of errors of commission, and once again there is a debit and a credit)		No
4 Error of original entry – an incorrect figure is entered in the records and then posted to the correct account Example: Cash $1,000 for plant repairs is entered as $100; plant repairs account is debited with $100		No
5 Reversal of entries – the amount is correct, the accounts used are correct, but the account that should have been debited is credited and vice versa Example: Factory employees are used for plant maintenance: Correct entry: Debit: Plant maintenance Credit: Factory wages Easily done the wrong way round		No
6 Addition errors – figures are incorrectly added in a ledger account		Yes
7 Posting error a. an entry made in one record is not posted at all b. an entry in one record is incorrectly posted to another Examples: cash $10,000 entered in the cash book for the purchase of a car is: a. not posted at all b. posted to Motor cars account as $1,000		Yes
8 Trial balance errors – a balance is omitted, or incorrectly extracted, in preparing the trial balance		Yes
9 Compensating errors – two equal and opposite errors leave the trial balance balancing (this type of error is rare, and can be because a deliberate second error has been made to force the balancing of the records or to conceal a fraud). Yes, to correct each of the errors as discovered		Yes, to correct each of the errors as discovered

For examination purposes we are more often concerned with the second of these – differences and error correction.

Correcting errors

Errors 1 to 5, when discovered, will be corrected by means of a journal entry between the accounts affected. Errors 6 to 9 also require journal entries to correct them, but one side of the journal entry will be to the suspense account opened for the difference in the records. Type 8, trial balance errors, are different. As the suspense account records the difference, an entry to it is needed, because the error affects the difference. However, there is no ledger entry for the other side of the correction – the trial balance is simply amended.

Source: http://www.accaglobal.com/my/en/student/exam-support-resources/fundamentals-exams-study-resources/f7/technical-articles/suspense-accounts.html