M/s. Satya Paul steels were unable to agree the Trial Balance as on 31st March, 2024 and have raised a suspense account for the difference. Next…
CA Foundation · Accounting · MTP · January 2025
M/s. Satya Paul steels were unable to agree the Trial Balance as on 31st March, 2024 and have raised a suspense account for the difference. Next year the following errors were discovered: (i) Repairs made during the year were wrongly debited to the building A/c -37,500. (ii) The addition of the 'Freight' column in the purchase journal was short by - 4,500. (iii) Goods to the value of 3,250 returned by a customer Parth., had been posted to the debit of Parth and also to sales returns. (iv) Sundry items of furniture sold for 50,000 had been entered in the sales book, the total of which had been posted to sales account. (v) A bill of exchange (received from Comfort & Co.) for 60,000 had been returned by the bank as. dishonoured and had been credited to the bank and debited to bills receivable account. You are required to pass journal entries to rectify the above mistakes.
Suggested Answer and Working Notes:
Rectification entries in the books of M/s Satya Paul Steels Particulars L.F. Dr. ₹ Cr. ₹ 1. Profit and Loss Adjustment A/c Dr. 37,500 To Building Account 37,500 (Repairs amounting - 37,500 wrongly debited to building account, now rectified) 2. Profit and Loss Adjustment A/c Dr. 4,500 To Suspense Account 4,500 (Addition of freight column in purchase journal was under casted, now rectification entry made) 3. Suspense A/c Dr. 6,500 To Parth 6,500 (Goods returned by Parth had been posted wrongly to the debit of his account, now rectified) 4. Profit and Loss Adjustment A/c Dr. 50,000 To Furniture account 50,000 (Being sale of furniture wrongly entered in sales book, now rectified) 5. Comfort & Co. Dr. 60,000 To Bills receivable A/c 60,000 (Bill receivable dishonoured debited to Bills receivable account instead of customer account, now rectified)
Topics: Rectification of Errors
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