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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Quick Summary
This discussion addresses a low cash-on-hand balance of Rs 15 lacs in a private hospital's accounting records, likely due to new construction expenses. It explores various adjustment procedures, including tracking unrecorded invoices, reviewing bank transactions, and utilising suspense accounts. The conversation delves into the theoretical and practical aspects of suspense accounts, their debit/credit balances, and how they impact the trial balance and balance sheet equation.
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?
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.
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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