Suspense Account Junk

Why is all this stuff ending up in suspense?

I am new at this, but the when fund are left in suspense it is because the assets and liabilities are not in balance. The difference is therefore placed in suspense.

There is always a reason why some transactions would be posted to suspense. Here a few:

  • Incorrect journal entries where debits don’t equal credits (the difference goes to Suspense)
  • Incorrect opening balances where debits don’t equal credits (the difference goes to Suspense)
  • Uncategorized transactions where account is not selected on line item (the line item amount goes to Suspense)


From accounting point of view, it’s important these amounts go to Suspense to make sure your accounting system doesn’t break double-entry accounting principle where assets - liabilities = equity even if you do something wrong.

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Thanks Guys, I am an Idiot! I have worked out what I was doing wrong.

Just to make some things clear. I’ve raised a Debit Note from my supplier credit note for $1000 (no stock was returned), and ended up with $-1000 Accounts Payable in Liabilities Section and $1000 Suspense in Equity. Should I just leave it as it is till my next purchase from that supplier? Is it correct? Thanks!

No, you should not leave it. Suspense is where Manager parks mistakes until you fix them. In this case, you did not choose an account to allocate the debit note to. Read these Guides:

The two legs of the double-entry accounting for a debit note are:

  • Debit Accounts payable and the supplier’s subaccount
  • Credit the expense account to which the original purchase was debited.

In Manager, the debit to Accounts payable is accomplished by selecting the Supplier from the dropdown list. The credit to the expense account is accomplished by selecting it in the field named Account for the line item being adjusted.

Hi! I’ve tried to allocate it to Accounts Payable, but there is no such option in drop-down menu for accounts (see attached screenshot)

To clarify this misleading comment “You should have allocated the debit note to Accounts payable”

When you select the Supplier, then that selection allocates it to the Accounts Payable.
For the Account, you allocate to the account which was used on the original Purchase Invoice.
So if the original Purchase Invoice used “Stationery” account, then the Debit Note should also use “Stationery”.

Thank you for pointing out the needed clarification, @Brucanna. @Skyruner, I originally wrote that the transaction should be allocated to Accounts payable and the supplier’s subaccount, but did not mention choosing an expense account. I have edited my post to include both the debit and credit legs of the transaction.

Thank you for editing your post. I forgot to mention that in my case I can’t allocate that credit to any expense account, due to the fact that Supplier gave me that credit note for my future spending, so it’s cant be connected with any PO from that supplier or expense.
I am not sure if that’s correct, but I’ve created additional account called “Supplier Credits” in equity section and used that account in Debit Note to get rid off money sitting at Suspense.

Your approach is almost correct. But your Supplier Credits account would not traditionally be placed in the Equity group, because it does not directly relate to anyone’s investment in the business. (Your books would still balance, though.) Supplier Credits is normally listed as a contra Liabilities account. Thus, it will show with a negative balance, offsetting Accounts payable.

This may be more than you want to know, but accountants differ on whether Customer/Supplier credits should be rolled into Accounts receivable/payable for simplicity or kept separate for visibility. Manager now does it the first way, although it originally did it the second way. You don’t have much choice, because your transaction involved no money, and you must have an account for the credit leg of the transaction.

Thank you for a such brilliant answer! Only thing that I found with my approach is that if I create a PO for that supplier with total $1000 + Tax, Accounts Payable changes from -1000 to 0, but Supplier Credits in Equity group still shows 1000… Same thing happens if I keep it as Suspense

You are not doing what you say you are. A purchase order has no financial impact on anything. Perhaps you meant a purchase invoice. And you must be referring to action after you’ve entered the debit note as per your original description (since you still have Supplier Credits in the Equity group.

If that is what you meant, the purchase invoice would have credited Accounts payable, moving the balance in a positive direction. But you also mentioned tax, and I see only a 1,000 movement. Was your purchase invoice perhaps checked as being tax-inclusive? If so, all is well, at least as far as the program working correctly.

But you wanted to apply your balance in Supplier Credits to the purchase invoice. To do that, you have to convert the debit note amount to income in some way, moving it from your balance sheet to your profit and loss statement. (It can be considered as income because it has provided you with the means to purchase goods, even though it wasn’t money.) Alternatively, you could convert it to a contra expense because it reduces the amount you will pay when you purchase new goods. Where you account for it, you will be applying a credit to an account you choose or create for this purpose. I’ll call it Account X.

The solution is a journal entry, which can be entered any time after the debit note is recorded, but before the purchase invoice is entered. That way, Manager will automatically apply the available credit from the debit note to the purchase invoice. And your P&L will correctly reflect the difference between income and expenses. The final effect will be the equivalent of these double entries:

From the debit note:
Dr Accounts payable => Supplier 1,000 (moving A/P negative)
Cr Supplier credits 1,000

From the journal entry:
Dr Supplier credits 1,000
Cr Account X 1,000

From the purchase invoice:
Dr Expense account for purchase 1,000
Cr Accounts payable => Supplier 1,000 (moving A/P back to zero)

A few more points:

  • The final purchase invoice does not have to be for 1,000. Manager will apply enough of the available credit to future purchase invoices from this supplier to use it up, or will carry forward the unused portion.

  • Studying the debits and credits in the multi-step, equivalent process could well suggest to you a simpler approach. In fact, this would be my preference, as long as your next purchase from this supplier will be soon. The only reason I did not mention it to you earlier is that you already had your Supplier credits account on the balance sheet side, and that is a fairly traditional place for it. But a more direct solution would have been to allocate the line item on the original debit note directly to an Account X in the income section of the P&L. That eliminates the journal entry. The problem with this approach is the distortion of income if you are using accrual basis accounting. You have not earned that income, and may not if you don’t purchase again.

  • The advantages of carrying Supplier credits as a contra liability account are that (a) it is visible and (b) directly reduces total liabilities by offsetting Accounts payable.

  • A totally separate approach is not to record the debit note at all at present. I think would be acceptable accounting because it has no net financial impact unless you buy something from the supplier in the future. At that time, it could be entered as a discount, lowering the price you paid. The credit note your supplier gave you (which is what you should be entering as a debit note in your books) could be retained as documentation of the discount. This would be the equivalent of Account X being a contra expense account.

Sorry for the long post.