Question 30.
There was an error in the Trial Balance of Ram Gopal on 31st March, 2018 and the difference in books was carried to the Suspense Account. On going through the books, you find that:
(i) ₹ 540 received from M. Mehta was posted to the debit side of his account.
(ii) ₹ 100 being purchases return was posted to the debit of the Purchases Account.
(iii) Discount of ₹ 300 received was posted to the debit of the Discount Account.
(iv) ₹ 374 paid for motor car repairs was debited to the Motor Car Account as ₹174.
(v) ₹ 400 paid to C. Das was debited to the account of G. Dass.
Pass the Journal entries to rectify the above errors and state what amount was carried to the Suspense Account.
Answers
Every entry is explained in order for you to have a better understanding.
Explanation:
(i) Suspense A/c Dr. 540
To M. Mehta A/c 540
Mehta account is credited as it was wrongly debited. Suspense account is debited.
(ii) Suspense A/c Dr. 200
To Purchase A/c 100
To Purchase return A/c 100
We credited the purchase account as it was credited by error. Purchase return is credited as it is the return of the purchases. Suspense account is debited to complete the transaction.
(iii) Suspense A/c Dr. 600
To Discount A/c 600
Here discount account is credited with 600 i.e. double the amount because
first it was wrongly debited secondly it was our income as we received the discount. Suspense account is debited with 600.
(iv) Motor car repair A/c Dr. 374
To motor car A/c 174
To Suspense A/c 200
Motor car repairs account need to be debited as it was the expense incurred on the repair of motor car. Motor car is credited with 174 as it was wrongly debited with that amount. Suspense account is credited with the the balance amount.
(v) C. das A/c Dr. 400
To G. das A/c 400
C das account is debited as it was paid to him. G das account is credited as it was wrongly debited to his account.
The amount carried to suspense account will be 1680. we arrive at the amount by subtracting debit balance of the suspense account to the credit balance.