Cash balance adjustment
Kollipara Sundaraiah (B.com) (2963 Points)
17 September 2020question:
Assess cash balance amount rs:15 lacs how many types adjustment producure in accounting books.
Kollipara Sundaraiah (B.com) (2963 Points)
17 September 2020
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.
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when cash is withdrawn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
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.
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