Question

Question 33.
You are presented with a Trial Balance showing a difference which has been carried to the Suspense Account and the following errors are revealed:
(i) ₹ 1,700 paid in cash for an office equipment was charged to Office Expenses Account.
(ii) A cash sale of ₹ 5,000 to Black, correctly entered in the Cash Book, was posted to the credit of Black’s Account in the Ledger.
(iii) Goods amounting to ₹ 800, returned by Blue, were entered in the Sales Book and posted therefrom to the credit of Blue’s Account.
(iv) Furniture purchased for ₹ 8,100 was posted to Furniture Account as ₹ 810.
(v) Goods amounting to ₹ 10,000 sold to Red were correctly entered in Sales Book but posted to Red’s Account for ₹ 18,000.
(vi) Sales Return Book was overcast by ₹ 100.
You are required to pass the necessary rectification entries in respect of the above.

Answer 1

All journal entries are explained for better understanding for students.

Explanation:

(i) Office Equipment A/c Dr. 1700

      To office Expenses A/c    1700

Here we debited the office equipment as we purchased the equipment and it is our asset. Office expenses is credited as we wrongly debited it.

(ii) Black A/c Dr. 5000

       To Sales A/c  5000

Here Black account is debited as we wrongly credited cash sales to his account. Sales is credited as it was cash sales an we wrongly credited it to black account.

(iii) Sales return A/c Dr. 800

                Sales A/c Dr. 800

             To Suspense A/c 1600  

Here we debited the sales return account as it was the return of goods sold to blue so we need to debit it. Sales account is debited as we wrongly credited sales return to sales account. Suspense account is credited as information is not complete.

(iv) Furniture A/c Dr. 7290

          To suspense A/c 7290

Furniture account is debited with the amount required. Suspense account is credited to complete the transaction.

(v) Suspense A/c Dr. 8000

            To red A/c       8000

Red account is credited with the balance amount and suspense amount is debited against red account.

(vi) Suspense A/c Dr. 100

       To sales return A/c 100

Sales return is overcast so we need to credit it and suspense account is debited as we do not know the reason for its over cast.