Page 223 - ISCDEBK-XI

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.