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Prasanth kumar Kamisetty

Prasanth kumar Kamisetty

CA Foundation

11K+

05-Sep-20 13:02

21

Brs

Illustration 1. 7 th point

Answers (4)

Suraj Lakhotia

Suraj Lakhotia

Admin

05-Sep-20 17:48

Whenever you post a query, if you could share the question, it will be quicker for us to resolve.

Abhishek Purohit

Abhishek Purohit

CA Foundation

4K+

06-Sep-20 22:37

Discount act dr To suspense act

VIJAYA SARADHI MAGANTI

VIJAYA SARADHI MAGANTI

CA Foundation

740

09-Sep-20 23:58

Discount allowed is a loss to the business so it has debit balance as it is not posted in discount allowed column of cash book it will reduce the discount allowed total column by Rs 25. Which creates a difference(deficit of debit total) of Rs 25 in the total of debit balance and credit balance in trial balance and it will be transferred to suspense a/c. Once the reason for such difference is known suspense account balance is reversed and rectified with respective account as shown below entry. Currently suspense a/c will balance trial balance by appearing on debit side of trial balance which indicates suspense a/c has debit balance of Rs 25. Such (suspense a/c) debit will be credited as the reason known now and respective account (Discount allowed) will be debited which exactly should be debited. These nullifies the effect of suspense a/c. Hence, purpose of suspense account is served. Discount allowed a/c.....Dr. 25 To Suspense a/c. 25 (Being rectification entry passed in journal proper).