in this video we'll be learning about the suspense account please make sure you've already studied the trial balance because we'll be referring to the trial balance throughout this video the suspense account is used when the two columns of the trial balance the debit column and the credit column don't balance meaning that errors have occurred in the trial balance somewhere in the double entry or in the account balancing the spense account is used to record the difference between the two trial balance column totals and then is used to record The Double Entry that is needed to correct the errors let's have a look at the suspense account itself I've drawn it here at the bottom of the slide the suspense account is a normal te account and is posted to with debits and credits in the same way as any other t account the suspense account is refer referred to as being a temporary account so what does this mean it means that it is only in use while the errors affecting the trial balance are fixed and once the errors have been fixed the suspense account balances so there is never a balance carried forward on the suspense account as a result of this the suspense account never appears in the finalized income statement or statement of financial position this means that the suspense account doesn't have a category assigned to it it's not an asset liability income expense or Capital type account and the reason why it doesn't need a category is because it does not appear in those financial statements where the category is important let's discuss now how to use the suspense account using an example I've drawn here a trial balance on the left hand side of the screen if you add up the two columns you'll see that the totals are different and that's why we're going to need a suspense account let's go through this one step at a time in step one we add up the debit and credit columns and note the two totals adding up the figures in the debit column gives a total of 33,8 40 and adding up the amounts in the credit column gives a total of 36,000 you notice therefore that these two totals are different to each other in step two we calculate the difference between the two totals 36,000 minus 33,8 40 is a difference of 2,160 in step three we add a suspense account to the list of accounts in the trial balance as you can see that I've done here in the left hand side of the trial balance and I've shown it in red in step four we we put the difference that we calculated in step two in other words the £ 2,160 into the column which had the lower total you'll remember from step one that this was the debit total of 33,8 40 therefore I've put the £ 2,160 into the debit column the final step now is to add up the debit and credit columns again and to write in both of the totals it see that now they are the same as each other and so the trial balance balances which is what we need we've done this by forcing the debit column to add up by putting in that suspense amount I hope you're finding this video useful you can find other study resources that are free on www.st study theey way.com and subscribers have access to the full range of resources on the website which include topic videos that that cover the whole AQA a level accounting syllabus as well as worksheets with answers multiple choice quizzes that give you an immediate score and feedback and lots of revision resources too let's continue Now by turning our attention to the suspense account itself we'll be continuing with the example that we started previously in addition we will note that some following error the following errors that are shown here have also been identified we'll be correcting these errors and showing how the suspense account is affected by these Corrections and finally we'll show that the suspense account balances you'll recall that from our trial balance a few moments ago we needed to include a suspense account with a debit balance of £ 2,160 in order to make that trial balance balance we now show that in this suspense account so where we had 2,100 60 in the debit column of the trial balance we now show that on the debit side of the suspense account you'll see that I've done that here notice in the details column of the t account I've recorded this as being trial balance difference and that's the standard way of showing this over on the left hand side would be the date which matches the date of the trial balance now let's discuss how to use the suspense account to correct an error I'm going to just use a general example here to do this and then we'll turn our attention back to the main example that we're working through in the video step number one in how to use the suspense account is to draw the account or accounts that are incorrect that need to be fixed so here's our example a debit of £1,000 has incorrectly been posted to the rent paid account in other words the rent paid account is is the one that's incorrect and so I've drawn that tier count at the bottom of the slide in step two we put in any balance brought forward on the accounts you can see here that I've shown the 1,000 debit which we know was incorrect that's already been recorded in that account and so I've shown it here on the debit side I've labeled it as balance brought forward because that to me is a clear way of indicating that this is an amount that has all already been posted and therefore will need to be corrected in step three we identify what Double Entry needs to be posted in this account in order to correct it that 1,000 debit shouldn't be there remember that in Double Entry you're not allowed to just cross something out you have to post an extra amount in order to balance it out in order to effectively remove that error you can see here then that the correction consists of posting a credit of £1,000 the credit balances the original debit of 1,000 and so this account now balances which is correct notice that in the details column I've put suspense and the reason for that is because the other side of the this piece of Double Entry will be the suspense account so in step four we post the other side of the double entry to the suspense account and I've shown this here here in this extra tier count that I've shown in the bottom right hand corner of the slide in the suspense account I've posted a debit of 1,000 to complete the double entry so notice then that the double entry for the correction as shown here by the Red Arrows is a debit in the suspense account and a credit in the rent paid account and that's how we use the suspense account to correct an error in this case in the rent account let's go back now to our main example that we were working on I've put the steps that we need to follow up in the right hand corner here of the slide so that you can follow them through as we work through the example remember that we've put in our trial balance difference already as a debit in the suspense account so we'll move on now to correcting the errors the first error wages paid of £ 4,210 were committed or missed out from the Wagers account but they were posted correctly to the bank account so in step one we draw the account that is incorrect In this case it's the Wagers account we put in as a balance brought forward any amount that was posted incorrectly in this case there isn't anything because the wages paid that should be there were simply missed out so there isn't anything to put in as a balance brought forward in step three we identifi the double entry that needs to be posted to correct the wages account in other words it's a debit posting of £ 4,210 because wages is an expense account the other side of this double entry then step four is to post this into the suspense account and you can see that I've done that in the suspense account near the top of the slide so the correction then is to debit the wages account and credit the suspense account and that completes the correction of error one error number two rent received of £1,700 was incorrectly posted to the debit side of the rent paid account so here we have two errors the rent received account is incorrect and so is the rent paid account and so for step one I've drawn both of those accounts I've also completed step two because there is a balance brought forward in other words a posting that has already been made to the rent paid account which is that debit of £1,700 we now move on to step three to identify the double entry to make the correction in this case there's actually two pieces of Double Entry that we need to post because we'll post one for each account that's wrong so let's look at the rent paid account that account should be empty because there isn't actually any rent paid to show so the correction is to post a credit of £1,700 to balance that account the other side of the double entry then is posted in the suspense account which you can see I've shown here in the suspense account as a debit moving on to the rent received account the correction to this account is to post a credit because the rent received account is an income type account and the rules of double entry tell us that to record income we show a credit the other side of this double entry then is to post a debit in the suspense account and you can see that I've shown that that completes the correction of error two finally we move on to error number three the sales revenue was overcast by £1,350 the word overcast means Too High by step one is to draw the account that is incorrect In this case the sales revenue account and step two is to put in any balance brought forward to be absolutely clear about what's going on here you can see that instead of writing balance brought forward in this particular case I've actually written the words Too High by 1,350 it's shown on the credit side of the sales revenue account because sales revenue is an income category account and you'd expect therefore the balance to be on the credit side so we can see now that the sales revenue account credit balance is too high by £1,350 so in order to correct that step three we're going to post a debit to the sales revenue account of 1,350 to reduce the credit balance down by that amount the other side of the double entry then having posted a debit in the sales revenue account is to post a credit in the suspense account and you can see that I've done that here that completes the correct of the three errors so now we have posted everything that we need to to the suspense account the final step then is to balance the suspense account by adding up the figures in the debit column and writing in the total and adding up the figures in the credit column and writing down the total when you do that you see that the two totals are in fact the same therefore there is no balance carried forward or brought forward on this account the the account balances exactly and therefore we have no further use for it at this moment in time and that completes this example of the suspense account subscribers 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