Topic:- Rectification of errors
(1) There was a difference of Rs 720 in the Trial Balance which has been transferred to the credit side of the Suspense Account. Pàss the CORRECT, INCORRECT and RECTIFIED entries and prepare a Suspense Account.
(a) An amount of Rs 375 now posted on the debit side of the Commission Account instead of Rs 275.
(b) Credit amount of Rs 260 posted to the debit side of the Personal Account as Rs 360.
(c) Goods sold to Surinder recorded in Purchases Book Rs 300.
(d) D's bill for the érection of godown for Rs 1200 has been charged to the Repairs Account.
(2) The Trial Balance of M/s. Gupta & Sons show a difference of Rs 52200. To prepare the Final Account on 31st March 2021, this difference is placed in a Suspense Account. Afterwards, the following errors were disclosed. Pàss the CORRECT, INCORRECT, and RECTIFIED entries and show the Suspense Account.
(a) Purchases Book total had been undercasted by Rs 20000.
(b) A cheque received from Vasudev for Rs 7800 had been debited in the Cash Book but not posted in Vasudev's Personal Account.
(c) Return Outward Book had been overcasted by Rs 10000.
(d) Goods returned by Yash Pal worth Rs 15000 have been entered in Return Outward Book. However, Yash Pal's Account is correctly posted.
Answers
Question:-
Topic:- Rectification of errors
(1) There was a difference of Rs 720 in the Trial Balance which has been transferred to the credit side of the Suspense Account. Pàss the CORRECT, INCORRECT and RECTIFIED entries and prepare a Suspense Account.
(a) An amount of Rs 375 now posted on the debit side of the Commission Account instead of Rs 275.
(b) Credit amount of Rs 260 posted to the debit side of the Personal Account as Rs 360.
(c) Goods sold to Surinder recorded in Purchases Book Rs 300.
(d) D's bill for the érection of godown for Rs 1200 has been charged to the Repairs Account.
(2) The Trial Balance of M/s. Gupta & Sons show a difference of Rs 52200. To prepare the Final Account on 31st March 2021, this difference is placed in a Suspense Account. Afterwards, the following errors were disclosed. Pàss the CORRECT, INCORRECT, and RECTIFIED entries and show the Suspense Account.
(a) Purchases Book total had been undercasted by Rs 20000.
(b) A cheque received from Vasudev for Rs 7800 had been debited in the Cash Book but not posted in Vasudev's Personal Account.
(c) Return Outward Book had been overcasted by Rs 10000.
(d) Goods returned by Yash Pal worth Rs 15000 have been entered in Return Outward Book. However, Yash Pal's Account is correctly posted.
Solution:-
[Refer to the above attachment for your answer 1 and 2]
Explanation:
(1) Rectification of Errors and Preparation of Suspense Account:
(a) Incorrect Entry:
Commission Account Debit: Rs 375
Suspense Account Credit: Rs 375
Rectified Entry:
Commission Account Debit: Rs 275
Suspense Account Debit: Rs 100
(b) Incorrect Entry:
Personal Account Debit: Rs 360
Suspense Account Credit: Rs 360
Rectified Entry:
Personal Account Debit: Rs 260
Suspense Account Debit: Rs 100
(c) Incorrect Entry:
Purchases Account Debit: Rs 300
Suspense Account Credit: Rs 300
Rectified Entry:
Sales Account Credit: Rs 300
Suspense Account Debit: Rs 300
(d) Incorrect Entry:
Repairs Account Debit: Rs 1200
Suspense Account Credit: Rs 1200
Rectified Entry:
Godown Account Debit: Rs 1200
Suspense Account Debit: Rs 1200
Suspense Account:
Credit Side:
Incorrect Entries:
Commission Account: Rs 375
Personal Account: Rs 360
Total: Rs 735
Rectified Entries:
Suspense Account Debit (a): Rs 100
Suspense Account Debit (b): Rs 100
Suspense Account Debit (c): Rs 300
Suspense Account Debit (d): Rs 1200
Total: Rs 1700
Net effect:
Suspense Account Debit: Rs 965 (Rs 1700 - Rs 735)
Suspense Account Credit: Rs 720 (Opening balance from Trial Balance)
Net difference in Suspense Account: Rs 245 (Rs 965 - Rs 720)
(2) Rectification of Errors and Preparation of Suspense Account:
(a) Incorrect Entry:
Purchases Account Debit: Rs 20,000
Suspense Account Credit: Rs 20,000
Rectified Entry:
Purchases Account Debit: Rs 20,000
Suspense Account Debit: Rs 20,000
(b) Incorrect Entry:
Cash Account Debit: Rs 7,800
Suspense Account Credit: Rs 7,800
Rectified Entry:
Vasudev's Personal Account Debit: Rs 7,800
Suspense Account Debit: Rs 7,800
(c) Incorrect Entry:
Return Outward Account Debit: Rs 10,000
Suspense Account Credit: Rs 10,000
Rectified Entry:
Return Outward Account Debit: Rs 10,000
Suspense Account Debit: Rs 10,000
(d) No rectification required as Yash Pal's Account is correctly posted.
Suspense Account:
Credit Side:
Incorrect Entries:
Purchases Account: Rs 20,000
Return Outward Account: Rs 10,000
Total: Rs 30,000
Rectified Entries:
Suspense Account Debit (a): Rs 20,000
Suspense Account Debit (b): Rs 7,800
Suspense Account Debit (c): Rs 10,000
Total: Rs 37,800
Net effect:
Suspense Account Debit: Rs 37,800 (Rectified entries)
Suspense Account Credit: Rs 30,000 (Incorrect entries)
Net difference in Suspense Account: Rs 7,800 (Rs 37,800 - Rs 30,000)
I HOPE THIS HELPS YOU!
FOLLOW ME!