Page 142 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes Solution: The accountant could not tally the trial balance. The total of ‘credit side’ was more than
that of ‘debit side’ by 81,000. The accountant perhaps had to close the trial balance and present it
before his boss. He put the entire difference of 81,000 in suspense account and made the trial
balance tally. He, however, did not stop worrying about the difference of 81,000 in the trial
balance. That is how he detected the errors as mentioned above. Since the trial balance has already
been prepared, the accountant needs to pass complete journal entries to rectify the errors.

Journal Entries
S. No. Particulars L.F. Amount (Dr.) Amount (Cr.)
( ) ( )
(a) Rent A/c Dr. 10,000
To Salaries A/c 10,000
(Rent paid for the month of October, 2003 wrongly
debited to salaries account, now rectified)
(b) Carriage Outward A/c Dr. 7,500
To Carriage Inward A/c 7,500
(Carriage outward charges wrongly debited to carriage
inward account, now rectified)
(c) Suspense A/c Dr. 90,000
To Purchases A/c 45,000
To Sales A/c 45,000
(Cash sales erroneously debited in purchases account,
now corrected)
(d) Suspense A/c [25,200-22,500] Dr. 2,700
To Creditors A/c 2,700
(Rectification of excess debit in creditors account)
(e) Interest expense A/c Dr. 5,350
To Interest Income A/c 5,350
(Rectification of wrong entry in interest income account)
(f) Return Inward A/c Dr. 50,700
To Suspense A/c 50,700
(Return inward of 25,350 wrongly credited in that
account, now rectified)
(g) Creditors A/c Dr. 1,23,000
To Suspense A/c 1,23,000
(Rectification of a wrong credit in creditors account)

Let us now re-open the affected ledger accounts, and make the postings of rectification entries.
We shall not unnecessarily open other accounts.
Rent, Rates & Taxes Account
Dr. Cr.
Date Particulars J.F Amount Date Particulars J.F. Amount
( ) ( )
2011 2011
31 March To Balance b/d 1,67,500 31 March By Balance c/d 1,77,500
31 March To Salaries A/c 10,000
1,77,500 1,77,500

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