Rajesh kumar was unable to reconcile his trial balance on 31 march 2008 and has opened a suspense accoumt from the difference. later on the following errors were discovered:

1. there were 3 compensating errors:-

a)the total of sales return book was overcast by rs. 100

b) the total of one page of purchase book was carried forward as 1286 instead of 1826.

c)goods purchasedfrom C for rs 400 was debited to his account as rs. 40

2. rs.425 paid for wages to workmen for making office table were debited to wages account.

3. rent paid rs 1500 were posted to credit of rent account as rs150

4. cash received from ghanshyam rs 500 was correctly recorded in cash book but were posted to his account as rs 50

5. rs 720 paid to kamal has been debited to kamlesh a/c as 520

6. the total of purchase return book 2500 was left unposted.

pass rectifying entries and prepare suspense a/c.

Good attempt by all the students, though slightly missed the target. This is because the first part (1) of the question is about the compensatory errors. Such errors do not affect the Trial Balance, therefore, Suspense Account is not used to rectify these errors. The correct solution is given below.

Rectifying Journal Entries

Date

Particulars

L.F.

Debit Amount

(Rs)

Credit Amount

(Rs)

 

Purchase A/c

Dr.

 

540

 

 

To Sales Return A/c

 

 

100

 

To C

 

 

440

 

(Sales Return Book overcasted, wrong carried forward of Purchase Book and goods purchased from C wrongly debited to his account,now rectified)

 

 

 

 

 

 

 

 

 

Furniture A/c

Dr.

 

425

 

 

To Wages A/c

 

 

425

 

(Wages paid for office table wrongly treated as revenue expenditure, now rectified by capitalising it)

 

 

 

 

 

 

 

 

 

Rent A/c

Dr.

 

1,650

 

 

To Suspense A/c

 

 

1,650

 

(Rent paid of Rs 1,500 wrongly credited to Rent Account as Rs 150, now rectified)

 

 

 

 

 

 

 

 

 

Suspense A/c

Dr.

 

450

 

 

To Ghanshyam

 

 

450

 

(Cash received of Rs 500 from Ghanshyam posted as Rs 50, now rectified)

 

 

 

 

 

 

 

 

 

Kamal

Dr.

 

720

 

 

To Kamlesh

 

 

520

 

To Suspense A/c

 

 

200

 

(Cash paid to Kamal of Rs 720 was wrongly debited to Kamlesh Account with Rs 520, now rectified)

 

 

 

 

 

 

 

 

 

Suspense A/c

Dr.

 

2,500

 

 

To Purchase Return A/c

 

 

2,500

 

(Purchase Return undercasted by Rs 2,500)

 

 

 

 

 

 

 

 

Suspense Account

Suspense Account

Dr.

 

Cr.

Particulars

Amount

(Rs)

Particulars

Amount

(Rs)

Ghanshyam

450

Rent

1,650

Purchase Return

2,500

Kamal

200

 

 

Difference in Trial Balance (Balancing Figure)

1,100

 

2950

 

2950

 

 

 

 

  • -2

1a)sales ac   dr  100

to suspense ac  100

1b)purchase ac  dr  540

to suspense ac  540

1c)purchase ac  dr  400

suspense ac  dr  40

2)furniture ac  dr  425  

to wages ac  425

3)rent ac   dr  1650

to suspense ac   1650

4)suspense ac  dr  450

to ghanshyam ac  450

5)kamal ac  dr  720

to kamlesh ac  520

to suspense ac  200

 6) no entry will b passd

  • -1

can u pls explain me a) part of 1. transaction..

  • 1

Part 1 (a)

It means that Sales Return Book has been wrongly totalled Rs. 100 in excess. However, the individual entries are assumed to be correctly made. The mistake is made in adding the amounts.

.

We already know the periodic total of Sales Return Book is posted to the Sales Return A/c (i.e., debited, here) at the end of the period concerned. So, the Sales Returns A/c has been debited by Rs. 100 more than what should have been.

To rectify this pass the following journal entry:

Suspense A/c Dr. 100

 To Sales Returns A/c 100

  • -3
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