Example

On 31 December 2007, the trial balance is drawn up for J Mickley. This is a summary of the trial balance:

J Mickley - Trial Balance as at 31 December 2007

-	Dr	Cr
-	£	£
Total of all entries	47,500	46,900

To allow us to construct the final account, we enter the amount, in this case, in the credit column, and the trial balance will now appear as follows:

J Mickley - Trial Balance as at 31 December 2007

-	Dr	Cr
-	£	£
Total of all entries	47,500	46,900
Suspense account	-	600
-	47,500	47,500

The entry in the trial balance has to be represented by an account. Therefore, we will now open up a suspense account with a credit balance of £600.

Suspense

2007	-	£	2007	-	£
-	-	-	Dec 31	Difference in trial balance	600

Normally, we would be now forced to make a debit entry in another accounts somewhere else in the ledgers. However, in this case we make no entry as there need for the credit entry in the suspense account must be the result of excess debit entries made, or shortages on the credit side elsewhere in the accounts - i.e. the mistakes that we are trying to locate.

This balance will remain in the accounts until the errors have been located and corrected. If we assume that the error that had been made was that the capital account had been undercast by £600 then this would explain why we appeared to have shortage on the credit column. However, it is possible that the error was that a debit entry (e.g. purchases) had been overcast by £600.

Let us assume that the error in our example, was due to Motor vehicles being overcast by £600, then the procedure to correct this would be as follows:

1. Enter up the correction in the journal
2. Enter the amendment to correct the error
3. Enter the other half of the transaction in the suspense account.

If the error affects the trial balance then one entry in the transaction needed to correct the error must be in the suspense account.

The error is found on Jan 15, 2008 - the motor vehicles had been overcast by £600. A credit entry in this account will correct the errors. Therefore, a debit entry will be made in the suspense account.

The Journal

Details	Dr	Cr
-	£	£
Suspense	600	-
Motor vehicles	-	600
Motor vehicles account overcast - now corrected	-	-

Suspense

2008	-	£	2007	-	£
Jan 15	Motor vehicles	600	Dec 31	Difference in trial balance	600

Motor Vehicles

2008	-	£	2008	-	£
-	-	-	Jan 15	Suspense	600

Notice that once the errors have been corrected, the balance on the suspense account disappears. While a balance remains, we know that there must be at least one error remaining undetected which affects the agreement of the trial balance.