Errors revealed by

Trial Balance
IGCSE Accounting
IMELDA S. TAMPUBOLON
YOU WILL LEARN:

 HOW TO EXPLAIN THE CORRECT PROCESS TO FOLLOW WHEN TRIAL

BALANCE TOTALS DO NOT AGREE

 PREPARE JOURNAL ENTRIES TO INCLUDE ENTRIES IN A SUSPENSE

ACCOUNT TO CORRECT ERRORS
PROCEDURE WHEN TRIAL BALANCE
DO NOT AGREE:
 TEMPORARILY ADD AN EXTRA AMOUNT TO EITHER THE DEBIT OR
CREDIT COLUMN

 THIS EXTRA LABEL IS CALLED SUSPENSE ACCOUNT

 IT WILL BE NECESSARY TO OPEN A SUSPENSE ACCOUNT IN THE

GENERAL LEDGER TO RECORD THE AMOUNT

 THE ENTRY IN THE SUSPENSE ACCOUNT IS MADE ON THE SAME SIDE AS

THE ENTRY IN THE TRIAL BALANCE.
STEPS TO CONSIDER

 STEP 1
MAKE THE TRIAL BALANCE TOTALS AGREE BY ADDING AN EXTRA
AMOUNT

 STEP 2
OPEN SUSPENSE ACCOUNT IN THE GENERAL LEDGER TO RECORD THIS
ITEM
REMEMBER

 IT IS NECESSARY TO CHECK ACCOUNT TO FIND WHERE DEBIT HAS NOT

BEEN MATCHED BY A CREDIT ENTRY

 PREPARE THE LEDGER ACCOUNT CONTAINING THE ERROR IN THE

SUSPENSE ACCOUNT

 WHEN ALL OF THE ERRORS IN THE SUSPENSE ACCOUNT FOUND, IT

SHOULD BE CLOSE

 ERRORS NOT REVEALED IN THE TRIAL BALANCE ARE NOT CORRECTED

TROUGH SUSPENSE ACCOUNT
EXAMPLE CASE

HEDLEY JOHNSON’S TRIAL BALANCE AT THE END OF HIS FIRST

ACCOUNTING YEAR DID NOT BALANCE.
ALL ACCOUNT BALANCES WERE PRESENT AND COLUMN TOTALS
WERE CORRECT BUT TOTAL CREDITS EXCEEDED TOTAL DEBITS BY $
500. HE INVESTIGATED THE POSSIBLE SOURCES OF THIS DISCREPANCY
AND FOUND THE FIRST ERROR
ERROR 1
CORRECTING UNDERCAST EXPENSES
TOTAL CREDIT PURCHASES RECORDED IN THE PURCHASES JOURNAL
FOR MAY WERE $ 8 200 BUT HEDLEY HAD ADDED THEM UP
INCORRECTLY AND POSTED ONLY $ 8 000 TO THE PURCHASE
ACCOUNT. THE DEBIT BALANCE ON THE PURCHASE ACCOUNT WAS
UNDERCAST (BELOW) BY $ 2 000.
ERROR 2
CORRECTING AN OMITTED ENTRY
DISCOUNTS CREDITED TO TRADE RECEIVABLE ACCOUNTS HAD BEEN
ENTERED CORRECTLY TO THE DISCOUNTS ALLOWED COLUMN IN THE
CASH BOOK. HOWEVER, THE COLUMN TOTAL OF $ 390 FOR THE
MONTH OF DEBIT SIDE OF THE DISCOUNTS ALLOWED ACCOUNT THAT
MONTH.
ERROR 3
CORRECTING THE MISPOSTING OF AN ENTRY TO
LEDGER
SALES COMMISSION OF $ 540 RECEIVED IN SEPTEMBER WAS
CORRECTLY DEBITED TO THE BANK ACCOUNT IN THE CASH BOOK BUT
WAS RECORDED AS A CREDIT FOR $ 450 BY MISTAKE TO THE SALES
COMMISSION ACCOUNT. THE BALANCE AT THE END OF THE
ACCOUNTING YEAR ON THE SALES COMMISSION ACCOUNT WAS $
90 LESS THAN IT SHOULD HAVE BEEN.
SUSPENSE ACCOUNT