A trial balance shows debits exceeding credits by £360, and the difference is put to a suspense account. It is later found that a cash payment of £180 for rent was debited to the cash account instead of being credited, while the rent expense debit was posted correctly. Which journal clears the suspense account?
Answer and explanation
Correct answer: A. Debit suspense £360, credit cash £360
- Step 1: The payment should have been a credit of £180 to cash but was posted as a debit of £180.
- Step 2: The cash account is therefore £360 too high on the debit side, which explains the £360 difference.
- Step 3: Crediting cash £360 corrects the cash account; the matching debit goes to the suspense account, which holds a £360 credit balance.
Answer
Debit suspense £360, credit cash £360.
Why not the others: £180 would only reverse the wrong posting once and leave the cash account still £180 wrong. Debiting cash £360 would make the error worse by doubling it. Debiting cash £180 repeats the wrong posting at half the size and leaves the suspense account uncleared.
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