Petty cash payments recorded in the books included amounts t

Petty cash payments recorded in the books included amounts totalling £1,000, for which the
bookkeeper had no vouchers or explanations. No debit entries have yet been included for these cash
payments.
Requirement
(a) Prepare the journal entries necessary to correct the above errors and show the suspense account.
(b) Briefly describe the two main uses of a suspense account.

Solution

a) Suspense Account Dr 1,000

To Petty cash 1,000

(entry passed for recording the cash payment out of Petty cash)

b) i) Suspense account is used temporarily to carry doubtful payments/receipts recorded.

ii) It is used to record temporarily to hold entries which are yet to classify after gathering complete information.

iii) It will be useful while preparing Trail balance where debits and credits are not getting tallied.