Question

Purchase day book was undercast by rupees 45000 what will be the entry.

Answer 1

Answer:

Purchase A/c Dr. 10,000

To Profit & loss Adj. A/c 10,000

Suspense account is opened when there is one sided error i.e., the effect of which is seen on one account only. In such situations suspense account is opened to complete the double entry and follow double entry system of book keeping.

Purchase account always has a debit balance and when purchase book is undercast by some amount. This implies purchase account has to be debited. The correct entry therefore becomes -

Purchases A/c           Dr. 10000

       ToProfit & Loss adj.  A/c.         10000

As error is located after preparation of Final accounts, profit & loss adj a/c will be credited in place of suspense account.