1. SUSPENSE You sell on credit to Debtors
You buy on credit from Creditors
If an entry is on the Dr side of the Ledger then it is posted to the Dr side of the Journal
If an entry is on the Cr side of the Ledger then it is posted to the Cr side of the Journal

2. Types of Errors
The errors that affect the balancing of the trial balance
Those errors that are not revealed by the trial balance.
In the former a Suspense account is used temporarily to balance the trial balance.

3. A question on this topic has two types of adjustments, those errors that affect the balancing of the trial balance and those errors that are not revealed by the trial balance.
In the former a Suspense account is used temporarily to balance the trial balance.

4. Error not effecting Suspense
Insurance due €340 and rent prepaid to Sexton €460 were not recorded in the books. No entry therefore no Suspense So double entry is Dr Profit & Loss a/c 800 Cr Insurance Company 340 Cr Rent Prepaid 460 Narration Note

5. Corrected Net Profit
Profit & Loss entry on DR column of Journal It is a - Minus If on the CR Column of Journal It is a + Plus

6. Balance Sheet
The Insurance was due by Sexton so it is a Liability in Balance Sheet The Rent was prepaid to Sexton so it is also a Liability in Balance Sheet

7. Error effecting Suspense
Sexton returned furniture previously purchased on credit for €27,000. This was entered in the accounts as €37,000. //However, a credit note subsequently arrived from the supplier showing a transport charge of €500.// The only entry made in respect of this credit note is a credit entry of €26,500 in the creditor’s account.

8. Correct entry DR CR CREDITORS A/C Purchase Returns 26,500 PURCHASE
RETURNS A/C
Creditors ,500

9. Correcting Error Dr Creditors a/c Cr Suspense 26,500
Purchase Returns
Purchase Returns ,000
Purchase
Returns a/c
Creditors
Creditors ,000
Suspense
a/c
Creditors ,500

10. Journal Entry DR CR Purchase Returns 500 Creditors 10,000 26,500
Suspense

11. Alternative Journal DR CR Purchase returns 10,500 Creditors 16,000
Suspense
26,500

12. Corrected Net Profit
- + Purchase Returns (Dr Column) Therefore - minus

13. Balance Sheet
Creditors are a Liability Therefore Dr ENTRY is a minus for Creditors in Creditors: amounts falling due within 1 Year.