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Suspense

Suspense. By Maura Fehily. Pre-teaching. KWL Revise double entry Format of Trial Balance (reference simple Trial Balance). RECEIVER GIVER. 2 PEOPLE INVOLVED. Debit Credit RECEIVER GIVER. QUESTIONS. Adjustment in question 1

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Suspense

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  1. Suspense By Maura Fehily

  2. Pre-teaching KWL Revise double entry Format of Trial Balance (reference simple Trial Balance)

  3. RECEIVER GIVER 2 PEOPLE INVOLVED

  4. Debit CreditRECEIVER GIVER

  5. QUESTIONS Adjustment in question 1 60 mark JOURNALISE, PROFIT & LOSS AND SUSPENSE 100 mark JOURNALISE, PROFIT & LOSS AND SUSPENSE BALANCE SHEET AND THEORY

  6. Time Management Adjustment in question 1 60 - 100 mark question 26 - 42 minutes Start with theory part of question Worth up to 6 - 10 marks = 1.5 - 2.5 %

  7. Debits and Credits

  8. Journal Entries Step 1 T accounts Step 2 Do the correct entry Step 3 Look at what was incorrect and correct Step 4 Dr in T account Dr column in journal Narration Note must explain entry

  9. ALL JOURNAL ENTRIES WILL GO TO EITHER PROFIT AND LOSS OR BALANCE SHEET

  10. Profit & Loss Pick out entries for profit and loss Dr Journal = Minus Profit Cr Journal = Plus Profit

  11. Balance Sheet Entry in Dr Column = + Asset Entry in Cr Column = - Asset Entry in Cr Column = + Liability Entry in Dr Column = - Liability

  12. SUSPENSE • You sell on credit to Debtors • You buy on credit from Creditors • If an entry is on the Dr side of the Ledger then it is posted to the Dr side of the Journal • If an entry is on the Cr side of the Ledger then it is posted to the Cr side of the Journal

  13. A question on this topic has two types of adjustments, those errors that affect the balancing of the trial balance and those errors that are not revealed by the trial balance. In the former a Suspense account is used temporarily to balance the trial balance.

  14. Error not effecting Suspense Insurance due €340 and rent prepaid to Sexton €460 were not recorded in the books. No entry therefore no Suspense So double entry is Dr Profit & Loss a/c 800 Cr Insurance Company 340 Cr Rent Prepaid 460 Narration Note

  15. Corrected Net Profit Profit & Loss entry on DR column of Journal It is a - Minus If on the CR Column of Journal It is a + Plus

  16. Balance Sheet The Insurance was due by Sexton so it is a Liability in Balance Sheet The Rent was prepaid to Sexton so it is also a Liability in Balance Sheet

  17. Error effecting Suspense Sexton returned furniture previously purchased on credit for €27,000. This was entered in the accounts as €37,000.//However, a credit note subsequently arrived from the supplier showing a transport charge of €500.//The only entry made in respect of this credit note is a credit entry of €26,500 in the creditor’s account.

  18. Correct entry

  19. Correcting Error

  20. Journal Entry

  21. Alternative Journal

  22. Corrected Net Profit - + Purchase Returns (Dr Column) Therefore - minus

  23. Balance Sheet Creditors are a Liability Therefore Dr ENTRY is a minus for Creditors in Creditors: amounts falling due within 1 Year.

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