USA Suspense Account

[BALENZI DAVID NKWANGA]

when do we prepare a suspense account and how

 

[Steve-LevelUp]

It depends on what you need it for. Sometimes a suspense account is used for depositing a large bundle of checks. So, a suspense a account would be used as follows.

Customer pays an invoice

Dr. Undeposited Check
Cr. Accounts Receivable.

This is repeated for all the checks received that day.

Then, the final deposit is recorded.

Dr. Cash
Cr. Undeposited checks
This represents depositing the checks. The entry would match the total amount of all the deposits, while the undeposited checking account is the "suspense account"

 

[Fidget]

In my experience, a suspense account is only used when there is no identified account to post a transaction to, so it is held in a suspense account until that is resolved. This generally happens when money comes into the bank account without any clear indication of who's account it relates to, so it can't be posted properly until that is resolved, or sent back.

In the day and age of electronic accountancy there's far less scope for transactions being unable to be placed where they're supposed to go. In bygone years of manual ledgers they were used to balance the trial balance until errors causing the imbalance were found. So I think, by and large, suspense accounts are a bit old fashioned.