Accounting · Suspense Accounts and Error Correction
The junior accountant at Magadan Co was asked to process a transaction to record the unexpected receipt of $1,500 from a credit customer whose debt had been written off as irrecoverable several months previously. The cash receipt was correctly accounted for, but as the junior accountant was unsure of the other accounting entry required, it was recorded in a suspense account. What accounting entries are required to clear the suspense account?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Debit Suspense $1,500; Credit Allowance for receivables $1,500
- 2Debit Allowance for receivables $1,500; Credit Suspense $1,500
- 3Debit Suspense $1,500; Credit Irrecoverable debts $1,500✓
- 4Debit Suspense $1,500; Credit Receivables $1,500
Correct answer
Debit Suspense $1,500; Credit Irrecoverable debts $1,500
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