ExpertHard2 marksMultiple Choice
ACCA · Question 12 · Preparing a Trial Balance
Section A
A retail chain's trial balance fails to agree. The debit column totals $450,600 and the credit column totals $452,100. A suspense account is opened. It is later discovered that a cash sale of $750 was completely omitted from the books, and a payment for rent of $1,500 was credited to the bank but no debit entry was made. What is the balance on the suspense account after correcting these errors?
Section A
A retail chain's trial balance fails to agree. The debit column totals $450,600 and the credit column totals $452,100. A suspense account is opened. It is later discovered that a cash sale of $750 was completely omitted from the books, and a payment for rent of $1,500 was credited to the bank but no debit entry was made. What is the balance on the suspense account after correcting these errors?
Answer options:
A.
$1,500 Debit
B.
$750 Credit
C.
Nil
D.
$3,000 Debit
How to approach this question
1. Find initial suspense balance: 452,100 (Cr) - 450,600 (Dr) = 1,500 shortage on Debit side. So, Suspense = 1,500 Dr. 2. Analyze errors: Omitted transaction = no TB impact. One-sided rent entry = requires Dr Rent 1,500, Cr Suspense 1,500. 3. Final balance = 1,500 Dr - 1,500 Cr = Nil.
Full Answer
C.Nil✓ Correct
The initial difference is $1,500 (Credits exceed Debits), so a Suspense account is opened with a Debit balance of $1,500. The complete omission of the $750 cash sale does not affect the trial balance agreement. The rent payment was credited to bank but not debited to rent. To correct this, we Debit Rent $1,500 and Credit Suspense $1,500. This clears the suspense account to Nil.
Common mistakes
Adjusting the suspense account for the completely omitted cash sale.
Practice the full ACCA FA — Financial Accounting Practice Exam 6
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