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Cash balance adjustment

Kollipara Sundaraiah (B.com) (2963 Points)

17 September 2020

Assess maintained a private hospital.cash on hand balance Rs:15 lacs is low in accounting books.reason for assess new hospital construction strated.
question:
Assess cash balance amount rs:15 lacs how many types adjustment producure in accounting books.

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6 Replies

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 17 September 2020

It depends:

If you have expended that amount without recording, track invoices and record them.

Between payables and bank payments to see what transaction occurred.

check other books to see if you have recorded it in wrong books

Right now, create a suspense account and work on it.

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 17 September 2020

Now since this is related to cash at hand, check imprest accounts (petty cash book) and atm transactions.

Cash withdrawal a/c

To Bank a/c

when cash is withdrawn

then create a suspense account, and because cash in hand is a debit in balance sheet,

suspense a/c 15,00,000

To cash in hand a/c 15,00,000

being balance of cash in hand not recorded

you have to carry this to the trial balance as debit suspense because 15,00,000 expenses are not recorded.

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 17 September 2020

Rather, suspense account should represent decrease or increase of value. So reverse the above transaction like

Cash in hand a/c 15,00,00

To Suspense a/c 15,00,000

then credit it to trial balance. To discuss further, suspense account nature can be any type ie., nominal or real or personal based on the transaction. Leaving all of this, I could not use my imagination to create a suspense ledger. But I’m sure, if you record cash in hand on debit side of trial balance and suspense on credit side, there will be a mismatch on trial balance. But trial balance debit and credit tallies, which means suspense account here acts like a contra asset. This is not correct because it will not remind an accountant that balance is odd. So, full cash in hand is debited and suspense account should be credited to highlight the trial balance difference to users.

Does anyone else else have any opinions about this?

yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 17 September 2020

The real controversy lies in theory. It says, Suspense account is a debit balance when it is related to an asset. So be it.

Suspense a/c Dr.

To Cash in hand a/c dr.

This is the correct entry

Trial Balance			BS
	Debit	Credit	Receivables	9000	Cash in Hand DR.	1000
Revenues		80000	Inventory	5000	Suspense Cr.	1000
OP + Non.op Expenses	20000		Cash in hand	500
Receivables	9000		SUSPENSE ACCOUNT	1000	Suspense Account DR.	1000
Inventory	5000		Bank	5000	Cash in Hand CR.	1000
Cash in hand	500		NCA	241000
SUSPENSE ACCOUNT	1000	0	TOTAL	261500
Bank	5000		Total Equity
Equity		10000	Equity	70000
Payables		6000
Loan		5000	Liabilities
			Payables	6000
NC Liabilities		180500	SUSPENSE ACCOUNT	0
NC Assets	241000		Loan	5000
	281500	281500	NC Liabilities	180500
			TOTAL	261500

Now, It is fine even if it a credit balance in trial balance. Yes, it is still tallying the balance sheet equation when it is shown on the CREDIT side of the trial balance. But the trial balance is mismatching. From the below, one can conclude that SUSPENCE ACCOUNT in your query is DEBIT in balance sheet and DEBIT in trial balance tallies both of them and this entry is real.

Cash in hand a/c

To Suspense a/c

This is wrong entry. Like this, if you have any doubts, you can clarify them through Excel simulations.

Trial Balance			BS
	Debit	Credit	Receivables	9000	Cash in Hand DR.	1000
Revenues		80000	Inventory	5000	Suspense Cr.	1000
OP + Non.op Expenses	20000		Cash in hand	500
Receivables	9000		SUSPENSE ACCOUNT	1000	Suspense Account DR.	1000
Inventory	5000		Bank	5000	Cash in Hand CR.	1000
Cash in hand	500		NCA	241000
SUSPENSE ACCOUNT	0	1000	TOTAL	261500
Bank	5000		Total Equity
Equity		10000	Equity	70000
Payables		6000
Loan		5000	Liabilities
			Payables	6000
NC Liabilities		180500	SUSPENSE ACCOUNT	0
NC Assets	241000		Loan	5000
	280500	282500	NC Liabilities	180500
			TOTAL	261500

Kollipara Sundaraiah (B.com) (2963 Points)
Replied 17 September 2020

Sir,rs:15 lacs how many ways(source) cash on hand balance increased in books

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yasaswi gomes (My grammar is 💯 good I) (7290 Points)
Replied 17 September 2020

What was the initial cash in hand balance?

It must be like Missing Cash 15,00,000+Opening Cash in hand balance. Then it is easy to find out. I will attach this excel file if it allows me to and You can use it.

Attached File : 2750458 20200917134026 book1.xlsx downloaded: 61 times