Question

The Trial Balance prepared by Dhanraj did not tally and the difference was transferred to Suspense Account. Subsequently, the following errors were found. Rectify the errors and show the suspense Account. Also explain the effect of rectifying errors on the profits.a) A sale of Rs. 1600 to Kamalnath was posted to Karunanath. b) Insurance paid amounting to Rs 250 was posted twice. c) A sale of Rs 1500 for old machinery was passed through the sale book. d) A purchase of Rs. 600 from Kamesh was not passed through the books. e) Rs. 80, the debit balance on commission account was omitted from the trial balance. f) The purchase returns book was undercast by Rs 700.​

Answer 1

Answer:

When the trial balance tallies it provides us only with the proof of the arithmetical accuracy of the ledger accounts. However, there may still be some errors present. Some errors affect the trial balance while some do not. When the trial balance does not tally, it is a clear indication of the presence of errors. We need to identify and locate these errors. Thus, after locating them Rectification of Errors is also necessary.

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Rectification of Errors

On the basis of rectification of errors, we can classify the errors into the following two broad categories:

Errors not affecting the Trial Balance

Errors affecting the Trial Balance

The errors need to be categorized in these categories because we can usually rectify the errors not affecting the trial balance by passing a rectification journal entry. While the errors affecting the trial balance affect only one account and for these, we cannot pass a journal entry. However, we can pass a journal entry only by opening a Suspense A/c.

Answer 2

Answer:

Explanation:

Karuranath A/c   Dr.                   1600

  To Kamalnath A/c                                       1600

( Sale of Rs. 1600  to kamalnath was posted to karuranath )

Suspense A/c   Dr.                       250

    To  Insurance  a/c                                  250

( insurance paid ,posted twice)

Sales A/c    Dr.                        1500

   To machinery A/c                                        1500

(sale of old machinery)

Purchase A/c   Dr.                      600

   To  Kamesh A/c                                          600

Commision  A/c Dr.                     80

   To    Suspense A/c                               80

Suspense A/c                              700

    To   Purchase return A/c                         700