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Sale of Rs. 400 made to Gautam was correctly entered in the Sales Day Book but wrongly posted to the debit of Ram as Rs. 40: What is the journal entry to rectify the above error, using a Suspense Account?

Sale of Rs. 400 made to Gautam was correctly entered in the Sales Day Book but wrongly posted to the debit of Ram as Rs. 40: What is the journal entry to rectify the above error, using a Suspense Account? Correct Answer Gautam A/c Dr. 400 To Ram A/c 40 To Suspense A/c 360

A suspense account is an account of the general ledger that is used for the temporary recording of business transactions. The need for a suspense account arises due to the inability to identify the appropriate ledger account for the recorded transaction.

Key PointsHere, in the above question sale of Rs. 400 was incorrectly posted to Ram as Rs. 40 instead of posting it to Gautam at Rs. 400.

Therefore, in order to rectify the above mistake, we need to open a suspense account by passing the journal entries as follows:

JOURNAL ENTRIES:

Gautam A/c Dr.            Rs. 400

       To Ram A/c           Rs. 40

       To Suspense A/c   Rs.360  

(Being Rectification Entries Passed)

Additional Information3 golden rules

  1. debit the receiver, credit the giver
  2. debit what comes in, credit what goes out
  3.  debit all the expenses and losses, credit all the incomes and gains.

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