The following errors were committed by the accountant of Om Prakash wires . (i) Purchase of 1620from Anupam & Co. passed through Sales Day Book…

CA Foundation · Accounting · MTP · May 2026
The following errors were committed by the accountant of Om Prakash wires . (i) Purchase of 1620from Anupam & Co. passed through Sales Day Book as 1260 (ii) Credit sale of 4,200 to Alka & Associates . was posted to the credit of their account. How would you rectify the errors assuming that : (a) they were detected before preparation of Trial Balance. (b) they were detected after preparation of Trial Balance but before preparing Final Accounts, the difference was taken to Suspense A/c. (c) they were detected after preparing Final Accounts OR The Profit and Loss account of Ganesh showed a net profit of 5,75,000 after considering the closing stock of 2,55,000 on 31st March 2026. Subsequently the following information was obtained from scrutiny of the books. (i) Purchases for the year included - 10,500 paid for electrical fittings of the shop. (ii) Ganesh gave goods worth of 25,000 as free samples for which no entry was made. (iii) Invoices for goods amounting to 1,85,000 have been entered on 29th March 2026 but were not included in the stock. (iv) Sales amounting to 2,05,000 were dispatched on 27th March but were included in sales of April, 2026. (v) Goods costing - 55,000 were sent on sale or return basis in March, 2026 at a margin of profit of 331/2 % on cost. Approval was given in April, 2026 but these were considered as sales in March, 2026. Calculate. the value of stock as on 31st March, 2026 and the adjusted net profit for the year ended on that date.

Suggested Answer and Working Notes:

OR / Alternative Solution: Profit and Loss Adjustment Account Particulars ₹ Particulars ₹ To Advertisement (samples) 25,000 By Net profit 5,75,000 To Sales (goods approved in April to be taken as April sales: (55,000 + 18,333) 73,333 By Electric fittings 10,500 To Adjusted net profit 9,57,167 By Samples 25,000 By Stock (purchases of March not included in stock) 1,85,000 By Sales (goods sold in March wrongly taken as April sales) 2,05,000 By Stock (goods sent on approval basis not included in stock) 55,000 10,55,500 10,55,500 Calculation of value of inventory on 31st March, 2026 Particulars ₹ Stock on 31st March, 2026 (given) 2,55,000 Add: Purchases of March, 2026 not included in the stock 1,85,000 Goods lying with customers on approval basis 55,000 Value of inventory as on 31.03.2026 4,95,000 Note: Figures are rounded off to the nearest Rupee.

Topics: Rectification of Errors, Inventories

Open in Interactive Practice Hub · Full Practice Hub · Chapter Weightage · More in this subject

Related Questions in this Topic