Question 27.
Pass Journal entries to rectify the errors in the following cases:
(i) A purchase of goods from David amounting to ₹ 150 has been wrongly passed through the Sales Book.
(ii) A credit sale of goods of ₹ 120 to Peter has been wrongly passed through the Purchases Book.
(iii) ₹ 200, salary paid to Cashier, B. Naidu, stands wrongly debited to his Personal Account.
(iv) A credit sales of ₹ 4,230 to Krishan entered as purchase from Kishan ₹ 4,320.
(v) Ramesh’s Account was credited with ₹ 840 twice instead of once.
Answers
i) Purchase Account debit 150
Sale Account debit 150
David Account credit 300
ii) Peter Account debit 240
Purchase Account Credit 120
Sale Account Credit 120
iii) Salary Account Debit 200
Naidu Account Credit 200
iv) Krishan Account Debit 4230
Kishan Account Debit 4230
Sale Account Credit 4230
Purchase Account Credit 4230
v) Ramesh Account debit 840
Suspense Account Credit 840
Explanation:
i) Being purchase of goods from David wrongly entered through Sale book
ii) being credit sale of goods to Peter wrongly entered purchase account.
iii) Being salary paid to Naidu wrongly debited to his own account
iv) Being a credit sale to Krishan wrongly entered to Purchase from Kishan
v) Being Ramesh account was wrongly credit twice
Explanation is given to each and every journal entry to get better understanding.
Explanation:
(i) Sales A/c Dr. 150
Purchase A/c Dr. 150
To David A/c 300
Sales account is debited as it was wrongly credited treating it as sales so we debited to null it effect. Purchase account is debited to rectify the error. David account is credited with the twice amount one because it was wrongly treated as sales and other because it is purchase so David becomes our creditor.
(ii) Peter A/c Dr. 240
To Sales A/c 120
To Purchase A/c 120
Peter account is debited with the double amount one because it was treated as sales so we would have credited the Peter account and one to rectify the error as it was credit sales. Sales account is credited as it was sale. Purchase account is credited as it was wrongly debited.
(iii) Salary A/c Dr. 200
To B. Naidu A/c 200
Salary account is debited it was our expense which is need to be debited. And moreover when we pay the salary we need to debit the salary account not the person account. Naidu account is credited because it was debited before so to rectify the error.
(iv) Here there is two error the account is wrong and also the amount is wrong so to make it easy we will do two entries.
The first entry is to null the effect of wrong entry i.e.
Kishan A/c Dr. 4320
To purchase A/c 4320
The second entry to rectify the error i.e.
Krishan A/c Dr. 4320
To Sales A/c 4320
This is the correct entry for credit sales. However this is made just to make it simple. Students can also merge both the entries too.
(v) Ramesh A/c Dr. 840
To suspense A/c 840
As the Ramesh account is credited twice we will debit it once to rectify the error. we opened a suspense account because it is not clear against which transaction it was credited.