Page 140 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes (d) An Invoice of 960 in respect of Motor Car debited to Motor Car A/c included the cost of
licence 60.
(e) 540 credited to Partners’ current Account for interest on capital had been debited to Bank
Interest account.
(f) Discount received from Mittal & Co. 200 had not been posted to Discount A/c. Pass entries
necessary to correct the errors and prepare the suspense account. Also find out what effect
these errors would have on the profit for the year ending 31st Dec, 2006.
Solution:
Journal Entries to rectify the errors
Dr. Cr.
S. No. Particulars L.F. Amount Amount
( ) ( )
(a) B Dr. 120
To A 120
(Error in B’s A/c Corrected.)
(b) Postage A/c Dr. 50
To Suspense A/c 50
(Postage A/c Omission corrected.)
(c) Suspense A/c Dr. 91
To Sales A/c 91
Sales Day Book balance
Wrongly carried forward
(Hence corrected 878 – 787)
(d) Motor Licence A/c Dr. 60
To Motor Car A/c 60
(Error in Motor Car A/c corrected.)
(e) Suspense A/c Dr. 1080
To Partner’s Current A/c 540
To Bank Interest A/c 540
(Error in Bank Interest A/c corrected and partners’ A/c
credited.)
(f) Suspense A/c Dr. 200
To Discount A/c 200
(Omission in Discount A/c corrected.)

Suspense A/c
Dr. Cr.
S. No. Particulars J.F. Amount S. No. Particulars J.F. Amount
( ) ( )
(c) To Sales A/c 91 (b) By Postage A/c 50
(e) To Partners’ current 540 By Balance 1321
A/c
(f) To Bank Int. A/c 540
To Discount A/c 200
1371 1371

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