One important use of Suspense Account is to bring the trial balance into agreement. The other uses are:
(a). If a book-keeper is not sure which account to debit or credit in a particular transaction, he can temporarily place the entry into a Suspense Account, and later when it is confirmed as to which account is appropriate the entry may be transferred from Suspense Account to that account.
A calculator was bought for cash $750. The book-keeper was not sure whether to debit office machines account or Electronic appliances account. It was later decided to place it in office machines account.
Dr. Suspense account: $750
Cr. Cash account: $750
Dr. Office machines account: $750
Cr. Suspense account: $750
(b). If an expense is incurred, the benefit of which is received by more than one account, such an expense can temporarily be placed to suspense account. Later the entries can be transferred to the relevant accounts in appropriate ratio.
A transport bill of $8,500 was paid in cash. It was later decided to charge 4/5 of it to carriage inwards and the rest to carriage outwards.
Dr. Suspense account: $8,500
Cr. Cash account: $8,500
Dr. Carriage inwards account: $6,800
Dr. Carriage outwards account: $1,700
Cr. Suspense account: $8,500