Page 223 - ISCDEBK-XI
P. 223

Rectification of Errors                                                       21.11
                       (b)   Salary A/c (` 12,600 + ` 1,260)                 ...Dr.       13,860
                                To  Suspense A/c                                                   13,860
                             (Being total of Salary Account ` 12,600 carried forward to next page as
                             ` 1,260 on the wrong side, now rectified)
                        (c)   Interest A/c                                   ...Dr.         650
                                To  Suspense A/c                                                     650
                             (Being interest on overdraft not posted to the ledger from
                             cash book, now recorded)
                       (d)   Party’s A/c                                     ...Dr.         600
                                To  Bad Debts Recovered A/c                                          600
                             (Being bad debt recovered wrongly credited to Party’s Account,
                             now rectified)

                     Dr.                               SUSPENSE ACCOUNT                               Cr.
                     Particulars                         `     Particulars                         `
                     To  Balance b/d (Balancing Figure)   15,590   By  Purchases A/c                 540
                                                                By  Sales A/c                        540
                                                                By  Salary A/c                     13,860
                                                                By  Interest A/c                     650
                                                        15,590                                     15,590

                                           EFFECT OF RECTIFICATION OF ERRORS ON NET PROFIT
                          Items          (a)           (b)          (c)           (d)          Total
                     Increase (`)        ...           ...           ...          600           600
                     Decrease (`)       1,080        13,860         650           ...         15,590
                                                                            Decrease in Net Profit  = ` 14,990
                     Note:  When bad debt is recovered, Cash Account is debited and Bad Debts Recovered Account is credited. At
                          the end of the accounting period, it is transferred to the credit side of the Profit & Loss Account.

                     Illustration 9.
                     Rectify  the  following  errors  by  passing  Journal  entries  and  determine  their  effect  on  the
                     Profit & Loss Account of the concern:
                       (i)  Returns Inward Book for December was short-totalled by ` 100.
                       (ii)  ` 5,810 being cash paid to Kishan Chand was debited to Ram Chand as ` 5,010.

                       (iii)  ` 1,500 worth of furniture purchased on credit was debited to Purchases Account.
                       (iv)  A purchase made for ` 500 was posted to the Purchases Account as ` 50.
                       (v)  Wages paid for the erection of machinery amounting to ` 700 was debited to Wages
                          Account.
                       (vi)  Goods purchased for proprietor’s use for ` 1,000 was debited to Purchases Account.
                      (vii)  A sum of ` 1,000 written off from machinery has not been posted to Depreciation Account.
                      (viii)  ` 1,000 received from Raghu has been debited to Sunder.

                       (ix)  ` 5,000 received from Radhey Mohan was debited to his account.
                       (x)  Purchase returns of ` 2,000 to Shri Hari Kishan were not recorded in the books.
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