Page 217 - ISCDEBK-XI

Rectification of Errors 21.5
(iii) Return outwards book was undercast by ` 150.
(iv) A credit sale of ` 870 was wrongly posted as ` 780 to the Customer’s Account in the
Sales Ledger.
(v) ` 6,000 being the cost of purchase of furniture for office was entered in the Purchases Book.
Pass rectifying entries, prepare the Suspense Account and find the effect of correction on profit
as on 31st March, 2022.
Solution: JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)
(i) Suspense A/c ...Dr. 1,500
To Profit & Loss Adjustment A/c 1,500
(Being the discount rectified was not posted from
Cash Book to Ledger, now rectified)
(ii) Profit & Loss Adjustment A/c ...Dr. 9,000
To Stock in Trade A/c 9,000
(Being the Closing Stock was overcast by ` 9,000, now rectified)
(iii) Suspense A/c ...Dr. 150
To Profit & Loss Adjustment A/c 150
(Being the Returns Outward Book undercast, now rectified)
(iv) Customer’s A/c ...Dr. 90
To Suspense A/c 90
(Being the credit sale of ` 870 was wrongly posted as ` 780,
to the customer’s account, now rectified)
(v) Furniture A/c ...Dr. 6,000
To Profit & Loss Adjustment A/c 6,000
(Being the purchase of furniure was wrongly entered
in Purchases Account, now rectified)
(vi) Kapil’s Capital A/c ...Dr. 1,350
To Profit & Loss Adjustment A/c 1,350
(Being the loss on rectification of wrong transactions transferred
to Capital Account)

Dr. SUSPENSE ACCOUNT Cr.
Particulars ` Particulars `
To Profit & Loss Adjustment A/c 1,500 By Balance b/d (Balancing Figure) 1,560
To Profit & Loss Adjustment A/c 150 By Customer’s A/c 90
1,650 1,650

Dr. PROFIT & LOSS ADJUSTMENT ACCOUNT Cr.
Particulars ` Particulars `
To Stock in Trade A/c 9,000 By Suspense A/c 1,500
By Suspense A/c 150
By Furniture A/c 6,000
By Kapil’s Capital A/c (Loss Transferred) 1,350
9,000 9,000
Note: Effect of correct profit as on 31st March, 2022:
Profit will be reduced by ` 1,350 subject to depreciation on furniture of ` 6,000.