ExpertHard2 marksShort Answer
ACCA · Question 06 · Preparing a Trial Balance
Section A
HeavyForge Manufacturing extracted a trial balance that failed to agree. The debit column exceeded the credit column by $450. A suspense account was opened. It was later discovered that a cash sale of $890 was correctly entered in the cash book, but was recorded as $980 on the debit side of the sales account.
What will be the balance on the suspense account after correcting this single error? (Enter the number only. If the balance is zero, enter 0).
Section A
HeavyForge Manufacturing extracted a trial balance that failed to agree. The debit column exceeded the credit column by $450. A suspense account was opened. It was later discovered that a cash sale of $890 was correctly entered in the cash book, but was recorded as $980 on the debit side of the sales account.
What will be the balance on the suspense account after correcting this single error? (Enter the number only. If the balance is zero, enter 0).
How to approach this question
Determine the initial suspense balance. Analyze the error: Cash sale of $890. Correct entry: Dr Cash 890, Cr Sales 890. Actual entry: Dr Cash 890, Dr Sales 980. Calculate the difference this caused in the trial balance and adjust the suspense account.
Full Answer
Initial TB: Dr > Cr by $450. So Suspense is $450 Credit.
Error: Dr Cash 890 (Correct). Sales was Dr 980 instead of Cr 890.
To correct Sales: Cr Sales by (980 + 890) = $1,870.
The correcting journal is: Dr Suspense 1,870, Cr Sales 1,870.
Suspense account: Started with $450 Cr. We debit it by $1,870.
New balance = 1,870 Dr - 450 Cr = $1,420 Debit.
Common mistakes
Failing to add the 980 and 890 together to fix the directional error, or getting the initial suspense balance direction wrong.
Practice the full ACCA FA — Financial Accounting Practice Exam 5
65 questions · hints · full answers · grading
More questions from this exam
Q01Section A
Quantum Innovations, a rapidly growing tech startup, is preparing its first set of for...EasyQ02Section A
MetroWater, a public utility company, is finalizing its annual report. The chief accou...MediumQ03Section A
GlobalHealth NGO receives a restricted cash grant of $50,000 specifically designated f...MediumQ04Section A
CircuitWorks manufactures specialized electronic components. At year-end, they have 1,...MediumQ05Section A
CodeCrafters Ltd is developing a new proprietary software platform. During the year, t...Easy