Page 233 - ISCDEBK-XI

Rectification of Errors 21.21
Dr. PROFIT & LOSS ADJUSTMENT ACCOUNT Cr.
Particulars ` Particulars `
To Supplier’s A/c 1,000 By Furniture A/c 25,000
To Suspense A/c 1,000
To Suspense A/c 500
To Capital A/c (Balancing Figure) 22,500
25,000 25,000

Effect of Corrections:
(i) Suspense Account will be nil;
(ii) Sundry Debtors Account will be increased by ` 1,760;
(iii) Sundry Creditors Account will be increased by ` 1,880;
(iv) Furniture Account will be increased by ` 25,000;
(v) Capital Account will be increased due to increase in profit by ` 22,500; subject to depreciation on furniture
wrongly posted to the Purchases Account.

Illustration 15.
There was a difference in Trial Balance of Sushant, a trader, on 31st March, 2022 and the
difference in books was carried to a Suspense Account and the books were closed. Subsequently,
on going through the books, the following errors were located:
(a) ` 2,296 paid for repairs of motor car, was debited to Motor Car Account as ` 696.
(b) A sale of ` 1,400 to J. Das entered in the Sales Book as ` 2,120.
(c) A cash discount of ` 800 received was entered in the Cash Book but was not posted in the ledger.
(d) ` 400 being purchase returns posted to the debit of Purchases Account.
(e) The purchase of a machine on 1st April, 2021 for ` 24,000 was entered in the
Purchases Book.
(f) While carrying forward total of one page in N. Das’s Account, the amount of ` 1,000 was
written on the credit side instead of the debit side.
(g) A cheque of ` 6,192 received from S. Das (after allowing a discount of ` 92) was endorsed
to P. Ghosh in full settlement for ` 7,000. The cheque was finally dishonoured but no entry
is passed in the books.
Give Journal entries to rectify the above errors and prepare Suspense Account.
Solution: In the Books of Sushant
RECTIFYING JOURNAL ENTRIES
Date Particulars L.F. Dr. (`) Cr. (`)
2022
April 1 Profit & Loss Adjustment A/c ...Dr. 2,296
(a) To Motor Car A/c 696
To Suspense A/c 1,600
(Being repairs to motor car of ` 2,296 wrongly debited to Motor Car
Account as ` 696, now rectified)
(b) Profit & Loss Adjustment A/c ...Dr. 720
To J. Das 720
(Being a sale of ` 1,400 wrongly entered in the Sales Day Book
as ` 2,120, now rectified)