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Often, accountants incorrectly record only one aspect of a transaction.

This error would cause the trial balance not to agree.

To correct this error, we use the suspense account.

A suspense account is an account prepared for an entry that causes disagreement in the trial balance. 

It can also be defined as a temporary account open by an organization to record ambiguous entries that need to be further investigated.

It is a temporary account set up to record errors that cause discrepancies in the trial balance pending the time the error would be located and corrected. 

A suspense account is a temporary account drawn up to correct the difference between the debit and credit side of the trial balance.

It is prepared so that the final account can be prepared while the error is being investigated.

So, in case, a trial balance does not agree, the difference is put to the suspense account.

Preparing a suspense account is important for two reasons: 

1. To record error: The accountant is unsure of where the error is made and decides to post it in a suspense account pending the correction of the error

2. Final account preparation: Because the debit and credit columns of the trial balance differ, a suspense account is created so that the trial balance will agree and the final account can be prepared while the error is being investigated.

It is vital to note that errors that do not cause disagreement in the trial balance are not recorded in the suspense account.

Only errors that cause disagreement in the trial balance are recorded in the suspense account 

We'll take some examples to help you comprehend the suspense account.

Example 1

Cash of N70,000 received from a debtor was recorded in the cash book only. You are required to correct the error.


The normal double entry for: "Cash of N7,000 received from a debtor", is debit cashbook and credit debtor account.

However, in this case, only Cashbook was debited, as the debtor account was not credited.

To correct this error, we debit the suspense account with N10,000 and credit the debtor's account with the same amount.

The journal entry is as follows

Dr Cr
Suspense account7,000
Debtors account7,000
(debtors account credited,
now rectified)

Example 2

A debtor paid N10,000 cash but his account was credited with N9000 While the cash book was debited with N10,000


The cash book was correctly debited with N10,000. But, the debtor account was wrongly credited with N9000, instead of 10,000.

To account for this 1000 shortfall in the credit side debtor accounts, we have to credit the debtor's account with N1000 so that the credit side of the debtor's account will increase to N10,000.

We will also debit the suspense account by N1000. This can be Journalize as

Dr Cr
Suspense account1,000
Debtors account
(Credit side of debtors
account under-cast by
N1000 now corrected)

Example 3

N8000, which is the total of the sales return daybook, has been wrongly debited to the purchase return daybook. Prepared a journal entry to correct this error


The N8000 sales return should have been debited to the sales return account, but, they have been credited to the purchases return account.

Notice that there are two errors here: the wrong account had been used and the entry which should have a debit has been entered as a credit.

To correct the error, we have to do two things

1. Reduce purchase return by N8,000. This would mean that we debit purchase return and credit suspense account

2. Increase sales return by N8,000. This would mean that we debit sales returns and credit suspense accounts.

Thus, the suspense account would therefore be 2 x N8000 or 16,000

If we are to Journalize this transaction, it would be as follows:

Dr Cr
Purchases return
Suspense account
Sales return account8,000
Suspense account
(Error of wrong entry
now corrected)

Example 4

Credit purchases of N4000 to Daniel were posted to the Sales account only

The dual aspect of this account would have been to debit Daniel's (debtors) account and credit sales.

However, only the sales account was posted. Hence, the suspense account would be to debit Daniel's account by N4000 and credit the  Suspense account by the same amount

Dr Cr
Daniel account4,000
Suspense account
Daniel account undercast
by N4000 now corrected)

There you have it. In the next post, we will look at an illustrative example of a suspense account.

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