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Accounting Process - Rectification of Errors Notes

  1. The trial balance of Mr. W & H failed to agree and the difference Rs.20,570 was put into suspense pending investigation which disclosed that:

    (i) Purchase returns day book had been correctly entered and totalled at Rs.6,160, but had been posted to the ledger.

    (ii) Discounts received Rs.1,320 had been debited to discounts allowed.

    (iii) The Sales account had been under added by Rs.10,000.

    (iv) A credit sale of Rs.1,470 had been debited to a customer account at Rs.1,740.

    (v) A vehicle bought originally for Rs.7,000 four years ago and depreciated to Rs.1,200 had not been sold for Rs.1,500 in the beginning of the year but no entries, other than in the bank account had been passed through the books.

    (vi) An accrual of Rs.560 for telephone charges had been completely omitted.

    (vii) A bad debt of Rs.1,560 had not been written off  and provision for doubtful debts should have been maintained at 10% of Trade receivables which are shown in the trial balance at Rs.23,390 with a credit provision for bad debts at Rs.2,320.

    (viii) Tools bought for Rs.1,200 had been inadvertently debited to purchases.

    (ix)   The proprietor had withdrawn, for personal use, goods worth Rs.1,960. No entries had been made in the books


    (i) Pass rectification entries without narration to correct the above errors before preparing annual accounts.

    (ii) Prepare a statement showing effect of rectification on the reported net profit before correction of these errors.

  2. On going through the Trial balance of Ball Bearings Co. Ltd. you find that the debit is in excess by Rs.150. This was credited to  Suspense Account .On a close scrutiny of the books the following mistakes were noticed

    (1) The totals of debit side of  Expenses Account  have been cast in excess by Rs.50.

    (2) The  Sales Account  has been totalled in short by Rs.100

    (3) One item of purchase of Rs.25 has been posted from the day book ledger as Rs. 250.

    (4) The sale return of Rs.100 from a party has not been posted to that account though the Party s account has been credited

    (5) A cheque of Rs.500 issued to the Suppliers  account (shown under Trade payables) towards his dues has been wrongly debited to the purchases

    (6) A credit sale of Rs.50 has been credited to the sales and also to the trade receivable account.

    You are required to  

    (i) Pass necessary journal entries for correcting the above

    (ii) Show how they affect the Profits; and

    (iii) Prepare the  Suspense Account  as it would appear in the ledger

  3. Mr. A closed his books of account on September 30,2016 in spite of a difference in the trial balance. The difference was Rs.830 the credits being short; itcarried forward in a suspense Account. In 2017 following  errors were located:
    (i)   A sale of Rs.2,300 to Mr.Lala was posted to the credit of Mrs. Mala.
    (ii) The total of the returns inward book for july,2016 Rs.1,240 was not posted in the ledger.
    (iii) Freight paid on a machine Rs.5,600 was posted to the Freight account Rs.6,500.
    (iv) While carrying forward the total in the purchases account to the next page, Rs.65,590 was written instead of Rs. 56,950.
    (v)  A sale of machine on credit to Mr. Mehta for Rs.9,000 on 30th sept.2016 was not entered in the books at all. The book value of the machine was Rs.6,750.
    Pass Journal entries to rectify the errors. Have you any comments o make?
  4. A merchant’s trial balance as on 30th  june ,2017 Did not agree. The difference was to put to a Suspense Account. During the next trading period the following errors were discovered:
    (i)    The total of the purchases book of one page, Rs. 4,539 was carried forward to the next page as Rs.4,593.
    A sale of Rs.573 was entered in the sales book as Rs.753 and posted to the credit of the customer.
    A return to a creditor, Rs.510 was entered in the returns inward book; however, the creditor’s account was correctly  posted.
    Cash received from C. Dass, Rs.620 was posted to the debit of G.Dass.
    Goods worth Rs.840 were dispatched to a customer before the close of the year but no invoice was made out.
    Goods worth Rs. 1,000 were sent on sale or return basis to a customer and entered in the sales book. At the close of the year, the customer still had the option to return the goods. The sale price was 25% above cost. You are required to give journal entries to rectify the errors in a way so as to show the current year’s profit or loss correctly
  5.       [Errors affecting accounts located before the preparation of trial balance]

           Pass necessary journal entries to rectify the following errors.

       1)    Sales return book was overcast by Rs.500.

       2)    Factory lighting bill Rs.9,000 paid but recorded twice in the books.

       3)    Paid rent Rs.725 was wrongly posted to rent account as Rs.275.

       4)    Total of Sales Book was undercast by Rs.850.

       5)    Wages paid for extension of building Rs.8,900 was charged to wages account.

       6)    Cash received from Moni was recorded on the payment side of cash book Rs.1,800.

       7)    Paid carriage for purchase of Machinery Rs.3,100 was charged to carriage account.

       8)    Life Insurance premium of proprietor paid Rs.1,650.

  6. (Two sided errors or errors affecting two accounts)

    Rectify the Following errors in the books of Anita.

          1)    Goods worth Rs.300 distributed as free samples not recorded in the books.

          2)    Purchased goods from Mr.Kaushal Rs.3,200 are not recorded at all.

          3)    A crossed cheque of Rs.960 Received from Mr. Rahul dishonored but was not recorded in cash book.

          4)    Goods purchased from Mr.Bhoomi Rs.4,500 was posted to Mr.Bhavesh’s account.

          5)    Salary of Rs.3,900 paid to our employee Mr.Amit was debited to his personal account.

          6)    Purchase of Equity shares from S.R.S Ltd for Rs.7,000.were not recorded.

          7)    Goods Purchased from Namrata Stores Rs.7,500 was recorded in sales books.

          8)    Paid wages for installation of Machinery Rs.2,800 wrongly debited to wages account.

  7. [Rectification of Errors of Principle]

    Pass necessary journal entries to rectify the following errors.

          1)    An amount of Rs.3,400 paid for rent was debited to personal account of Mr. Shubham the landlord of the premises

          2)    Life insurance premium of the proprietor paid Rs.1,520 was debited to insurance account.

          3)    Sold old Computer for Rs.8,900 to Kalu was posted to sales account.

          4)    Purchased Machinery for Rs.30,000 from Nashik Machinery Ltd was debited to purchase account.

          5)    Received commission Rs.375 was posted to interest account.

          6)    An amount of Rs.5,000 withdrawn by proprietor for his personal use was debited to sundry expenses account.

          Excess debit has been given to rent account Rs.1,500 and excess credit has been given to commission received account Rs.1,500
  8. [Errors of complete and partial omission]

          1)    Sold goods to Shalu Traders worth Rs.7,200 were not recorded in the books of accounts.

          2)    Purchase of furniture of worth Rs.6,500 was omitted from the books of accounts.

          3)    Paid wages Rs.11,000 by cheque was not recorded at all.

          4)    Cash paid to Chhaya Rs.2,900 though recorded in cash book was not posted to her personal account.

          5)    Purchased goods from Shivani Enterprise Rs.3,500 on credit was not posted to their personal account.

          6)    Short debit has been given to salary account Rs.500 and short credit has been given to interest received account Rs.500.

  9. A Trial balance shows excess debit of Rs.2,800 which was transferred to suspense account.  following errors were then located. Rectify them and prepare Suspense A/c.

          1)    Salary paid Rs.16,000 to Pinal was debited to Priya account.

          2)    Goods purchased of Rs.3,500 from Arjun were recorded as Rs.35,000 in the purchase book.

          3)    Rs.1,600 paid for printing bill was posted to credit side of printing bill account.

          4)    Purchased goods from Roma worth Rs.7,700 not posted to his account from purchase book.

          5)    Freight paid Rs.8,300 was posted twice to fright account.

          6)    Total of purchase book Rs.23,000 was posted to purchase account as Rs.s13,000.

  10. Trial balance of Mahadeo was not tallied. The difference was transferred to suspense account On investigation following errors were only located.

    1)    Loan taken from Bank of India Rs.15,000 was credited to Manoj’s capital account.

    2)    Defective goods returned by Heena of Rs.390 stands debited to Heena’s account. Though entered correctly in sales returns book.

    3)    A credit sale of Rs.6,800 to Reena Traders was not posted from sales book to Reena Traders account.

    4)    Office Salary includes Rs.1,500 paid for wages to work.

    5)    Amount due to Girish Rs.655 was brought forward as Rs.555.

    Amount due from Komal Rs.890 has been written off as bad debts but the same was not posted to bad debts account
  11. Rectify the following errors assuming that these errors were located after the preparation of Trial Balance. One sided errors be rectified by using suspense A/c.

    1)    Audit fees Rs.800 posted as Rs.80.

    2)    Discount allowed Rs.280 debited twice to discount allowed account.  

    3)    Amount of Rs.3,900 payable to supplier not taken in the list of Sundry creditors.

    4)    Discount received Rs.250 credited twice to discount received account.

    5)    Cheque issued to Nisha for Rs.2,200 has been recorded on the receipt side of the cash book in bank column.

    6)    Balance of commission received account Rs.935 was taken twice to trial balance.

    7)    Rs.1,450 received in respect of bad debts written off previously was credited to party’s account.

  12.  Rectify the following errors, use Suspense A/c wherever necessary.

     1)    Purchased Machinery of Rs.25,000 from Jyoti Traders was wrongly recorded in purchase book.

     2)    Extension to building of Rs.9,500 was debited to repairs account.

     3)    Total of returned outward book was under cast by Rs.410.

     4)    Received Rs.825 from Sujata wrongly debited to Suresh account.

     5)    Goods purchased from Bhoomi Rs.350 were recorded in return inward book.

     6)    Goods returned to Swati Rs.500 were recorded in sales book.

     7)    Goods purchased from Mona for Rs.800 was passed though sales book.

  13. How would you rectify the following errors?

          1)    Sold goods worth Rs.7,200 to Hira has been wrongly debited to Hinal account.

          2)    A purchase of Rs.950 from Abu has been wrongly debited to his personal account.

          3)    Cash Rs.500 received from Goli and entered on the receipt side of the cash book has not been posted to Goli’s account.

          4)    An amount of Rs.1,500 drawn by the proprietor for his personal use stands debited to sundry expenses account.

          5)    A payment of Rs.800 made by Neetu for cash purchase of goods from him stands debited to his personal account.

          6)    Rs. 300 written off as bad debts last year and now recovered was credited to customer’s account.

  14. Rectify the following errors.

          1)    Rent of Rs.700 paid to Roma has been debited to his personal account.

          2)    Sold goods to Rohit Rs.580 Has been entered in the purchase book as Rs.850.

          3)    Repair to furniture Rs.300 has been debited to furniture account.

          4)    Total of the sales return book is wrongly taken more by Rs.120.

          5)    A cheque for Rs.185 issued to Ms. Aasha has been wrongly entered in the column of the cash book.

  15. Rectify the following errors.

          1)    Goods returned to Mr.Pote as they were defective Rs.280 were not recorded in the books.

          2)    Commission received Rs.625 was recorded in the Journal proper but not posted at all.

          3)    Purchased Machinery from Hindustan Machinery Ltd. Rs.9,900 on credit was omitted from the books of accounts.

          4)    Additional capital Rs.20,000 introduced by proprietor in cash book was recorded in the cash book but was not posted to the capital in the ledger.

          5)    Cash received from Pratik Rs.3,300 though recorded in cash book was not posted to his personal account in the ledger.

          6)    Goods sold to Kashi Rs.6,565 on credit was not posted to his personal account.

  16. Rectify the following errors.

          1)    Purchase of Building was passed through purchase Book as Rs.65,000.

          2)    Wages paid for construction of building Rs.15,000 was wrongly debited to wages account.

          3)    Expense of installation of Machinery was debited to installation charges account Rs.55,000.

          4)    Brokerage paid Rs.600 for purchase of investment were debited to brokerage account.

          5)    Old Motor car purchased was debited to repairs account Rs.7000.

      Material purchased for construction of Building was debited to purchases account Rs.9,000
  17. Rectify the following errors.

    1)    Wages paid to Pratima was wrongly debited to his personal account Rs.8,000.
    2)    Advertisement expense Rs.9,100 paid to Priti Add. Ltd. was debited to Priti Add. Ltd.
    3)    Rent paid to landlord Deepak was debited to his personal account Rs.4,500.
    4)    Received interest from Bank of India was credited to Bank of India account Rs.500.
    5)    Repairing Charges Rs.1,500 paid to Motor Mechanic soni was debited to his personal account.
    6)    Cash purchases Rs.8,300 from Vikas Trader’s was debited to Vikas trader account.



  18. Rectify the following errors.

          1)    Purchase of stationery Rs.450 was debited to commission account.

          2)    Rs.7,000 received from Harsh has been wrongly posted to Hinal account.

          3)    Goods Rs.2,000 returned by Praveen were not recorded in the books.

          4)    Credit side of Subbhash account has been overcast by Rs.200.

          5)    Freight paid for purchase of furniture Rs.325 is debited to freight account.

       Goods sold worth Rs.8,000 to Vinita was posted to Vinod’s account
  19. Trial balance of Sagar did not agree. It showed an excess Rs.7,550. Sagar put the difference to suspense account.He located the following errors.

          1)    Sales return book was overcast by Rs.1,200.

          2)    Purchases book was undercast by Rs.750.

          3)    Goods returned to Monal Rs.1,000 were recorded through sales book.

          4)    Credit purchases from Monu Rs.6,000 were recorded through sales book.

          5)    Credit purchase from Dhoni Rs.4,000 were recorded through sales book. However, Dhoni account was correctly credited.

          6)    Salary paid Rs.3,500 was debited to employee’s personal account.

  20. Trial balance of Radhika did not agree. Radhika put the difference to suspense account. Subsequently she located the following errors.

          1)    Furniture purchased for Rs.6,000 was posted to purchases account as Rs.600.

          2)    Repairs to Machinery Rs.500 were debited to Machinery account.

          3)    Wages paid for installation of Machinery Rs.750 was posted to wages account.

          4)    Purchased material Rs.8,000 and wages Rs.2,000 were used for construction of building not recorded in the books.

          5)    Total of sales returns book Rs.2,000 was not posted to the ledger.

          6)    Old Furniture sold to Deep at its book value of Rs.2,500 was recorded through sales book.

  21. Rectify the following errors by opening a suspense account credit side of the trial balance was cast short and the difference of trial account.

          1)    Paid Rs.700 to Nisha was debited to Priti account.

          2)    Total of sales book cast short by Rs.175.

          3)    Purchased goods costing Rs.690 on credit from Swati was recorded in the purchase book but failed to credit Swati account.

          4)    Total of purchase book was overcast by Rs.95.

          5)    Received Rs.548 from Freeda on account was correctly recorded in cash account but Freeda account was credited by Rs.584.

          6)    Paid Advertisement Expenses amounted to Rs.350 was wrongly recorded twice in the Advertisement account.

  22. The Trial Balance of Girish is short of credit by Rs.1,250. This difference is shown as ‘Suspense’ account in the credit column of the Trial Balance .on scrutiny of accounts the following errors were traced out.

          1)    The purchase journal was overcast by Rs.250.

          2)    The periodical total of the sales book was cast short by Rs.1500.

          3)    The total of return in word book for the month was added short by Rs.100.

          4)    The total receipt side of the cash book was taken short by Rs.300 with result that the cash balance was shown as Rs.1700 instead of Rs.2,000.

          5)    Commission of Rs.100 received from Kriti was credited both to Commission account and to Kriti account.

  23. The Trial Balance shows a difference of Rs.1,339 in the debit column and is made to agree by putting this difference against a suspense account later the following errors were discovered, Rectify them and prepare a suspense account.

          1)    Goods sold to Dinu worth Rs.550 on credit this was recorded in sales book but not posted in the ledger to Dinu account.

          2)    Goods worth Rs.325 returned by Bhola The amount was credited to his account but was not entered in the sales Return Book

          3)    Neela paid Rs.760 to us, but their account was credited for Rs.706.

          4)    Goods worth Rs.225 purchased from Sudhir were wrongly entered in the sales Book.

          5)    An amount of Rs.320 owned by Koli was omitted from the list of Sundry Debtors.

          6)    The Purchase Book was overcast by Rs.252.

  24. A suspense account of a business shows a debit balance of Rs.1,075. Rectify the following errors and bring the suspense account to zero balance.

          1)    Machinery account has been balanced by excess amount Rs.75.

          2)    Our debtor Nanu’s account has been balanced by excess amount Rs.75.

          3)    The Total of purchase book is overcast by Rs.125.

          4)    The Total of sales return book is under cast by Rs.205.

          5)    Cash column of the cash book has been balanced short by Rs.120.

  25. Trial Balance includes an item as Suspense account on the debit side at Rs.109 on investigation. You find the following errors.

          1)    Sales day book has been overcast by Rs.250.

          2)    Goods returned by Rahul Rs.75 has been posted to his personal account only.

          3)    Goods worth Rs.160 returned to Rahul posted to his personal account only.

          4)    Shalu paid us a cheque of Rs.95 has been posted to his account as Rs.59.

          5)    Paid cheque to Sonu Rs.130 has been posted to his account only.

          6)    Rs.700 were due from K. Aasha written off as bad debts. After wards a final dividend of Rs.150 received from his estate has not been posted.

    Give journal entries’ to rectify the above, and also show how the suspense account will appear.

  26. How will you rectify the following errors?

    (1)A sale of goods to Babu of Rs. 7,500 has been wrongly debited to Dhabu’s A/c.

    (2)Installation charges paid for machinery Rs. 1,000 was wrongly debited to Wages A/c.

    (3)Wages paid Rs. 200 to Sonu was debited to his Personal A/c opened in the ledger.

    (4)Rent paid Rs. 200 was posted twice in the Rent A/c.

    (5)Salary paid to Raja Rs. 750 was not passed in Salary A/c.

    (6)Goods purchased from Mr. Shalu Rs. 5,000 was omitted to record in the books.

    (7)Commission received Rs.500/- was credited to sales A/c.

  27. Rectify the following mistakes committed by an inexperienced clerk Mr. Kumar:

    (1)A purchase of 1,000 from Mr. Rohit, instead of being credited to him from Invoice Book (i.e. Purchase Book) has been wrongly debited to his

    account with the same amount.

    (2)A payment of 1,000 made to Mr. Roma for cash purchase of goods from him, stands debited to his account.

    (3)Total of purchase Book is taken more by 100.

    (4)Goods sold to Mr. Yogeta of 400 has been entered in the Purchase Day Book and posted accordingly  to the Customer’s A/c.

    (5)Commission received 200 had been entered in the cash column of the Cash Book.

    (6)A sale of 720 was entered in the Sales Book as 270 and posted accordingly to the Customer’s A/c.

    (7)A cross cheque of 1,000 issued to Aalok has been wrongly entered in the cash column of the Cash Book.

    (8)Sales of old furniture for 300 has been passed through Sales Book.

    (9)Total of Purchase Book for the month of April 700 was not posted to the Ledger A/c.

  28. Correct the following errors. Suspense account was opened as Trial Balance was short by 10,078 on the debit side.

    (1)An amount of 640 received from M/s Shruti was posted to the debit as 64.

    (2)A Customer’s Personal account has been correctly credited with the discount of 85, but no corresponding entry has been made in the discount


    (3)The total of Sales Book 8,000 was carried forward as 6,000.

    (4)A deposited cheque for 600 returned dishonoured is posted to the debit of Bad Debts A/c. This cheque was received from Gopi

    (5)500 received for cash sales is credited in purchase Account.

    (6)130 received from Mr. kapoor against a debt previously written off has been credited to his account.

    (7)A sum of 1,000 written off as depreciation on furniture has not been posted to Depreciation Account.

    (8)A credit item of 85 has been debited to the Personal Account of Mr. Sudhir as 58.

    (9)An amount of 5,240 owing by customer was not taken in the list of Sundry Debtors.

    (10)Goods sold on credit to M/s Rutuja for 1,500 were credited to M/s.Rohit Account as 5,100.

    Prepare Suspense account after passing rectifying entries for the above.


  29. A Trial Balance is out by excess credit of ` 3,895 which is placed temporarily to the Suspense Account. Following errors were subsenquently
    discovered. Pass necessary rectifying journal entries and prepare Suspense Account.
    (1)Goods purchased of 2,000 from Mr. Ram was entered in Sales Book but in the ledger, the amount was correctly credited to Ram.
    (2)A credit balance of interest received 1,510 was shown as 1,150 in the Trial Balance.
    (3)A Creditor Mr. B is posted by 500 short.
    (4)Drawing  of goods of 1,200 by proprietor Mr. Lahor have been included in the Sales Book and posted to his account opened in the Debtors Ledger.
    (5)A Payment of 500 to Mr. Ruchik by a bearer cheque is entered in the cash column in the Cash Book as 50 and was posted to the credit side of Mr. Rutuja as 5.
    (6)An item of 1,000 relating to prepaid rent was omitted to be brought forward.
    (7)Cash 520 paid to Mr. Virju’s A/c and 250 paid to Mr. Birju, but while posting in the ledger, Mr. Birju’s a/c was debited by 520 and Virju’s A/c was debited by 250.
    (8)Goods worth400 returned by Mona & Co. were passed through Return Inward Book as well as returned Outward Book.
    (9)A credit balance of 2,000 of Mali Bros. was included in the list of debtors.
    (10) A cheque paid of 1,000 together with cash 2,000 to Mr. Subhash in settlement of his account of 3,100. While recording the transaction in the Cash book, 1,000 was entered in discount column, 2,000 in cash column and 100 in bank column.

    (11) While extracting the balance from Purohit’s Account in the ledger,100 in respect of goods sold to him in January had not been included in error.


  30. On 31st December 2012 the Trial Balance of Sona & Mona was not balanced and therefore, Suspense Account was opened. Following were the
    errors discovered during audit:
    (1)A credit purchase amounting to521 from Roma & Sons has been omitted to be passed through Purchase Book, but subsequently the payment
    made stands debited to an account opened in their names.
    (2)A cheque issue to Babulal Furniture Mart on purchase of furniture for 2,000 was returned dishonoured and thereupon Furniture Account  was
    credited .
    (3)Petty cash expenses as standing in the books at 500 were not incorporated in the Trial Balance.
    (4)Total of discount column on the receipts side of Cash Book amounted to 140 was wrongly posted to the credit of Discount Account in the ledger as 40.
    (5)Bank charged interest on bank overdraft 20 is recorded in the Cash Book as interest allowed by bank.
    (6)Debit balance of general; expenses 200 was entered in the credit column of the trial balance.
    (7)Goods supplied to Shiva of 5,000 less 5% trade discount was recorded in the Sales Book at gross amount.

    (8)Goods purchased from Ramji off 725, the invoice was correctly recorded in the Purchase Journal but was posted to Ramlal’s Account was settled by paying 700 and the balance for acquisition of land 500 was debited to Professional Charges Account 50.


  31. Rectify the following errors.

    The Trial Balance of Rupali was out by 8,450/- with excess Debit. Also open Suspense Account.

    (1)Total of debit side of the Trial Balance was added short by 1,000/-

    (2)Prepaid Insurance of last 500/- is not brought forward .

    (3)100/- received from Sonu as final divided, whose account was written off as bad – debts was standing to do the credit of Sonu account and was

    included in the list of creditors.

    (4)Accountant forgot to incorporate petty cash balance 50/- in the Trial Balance.

    (5)500/- received from Kashi in settlement of his account of 525 was entered in the cash book with interchanged  figure of cash and discount


    (6)Goods sold to M/s. Maya worth 5,000/- were correctly recorded in the books but these goods were later on returned and taken into stock but no

    entries were made in the books.

    (7)Advance received from customer, Shri Ram 5,000/- was correctly entered in the cash book but was posted to the debit of his account.


  32. Rectify the following errors with Suspense and find out the balance of Suspense A/c.

    (1)A sum of 7,000/- paid for repair and maintenance of machinery was wrongly charged to furniture account.

    (2)Two tables of 1,000 each purchased from Reliance Ltd. was debited to purchases A/c as 2,000 and posted to Reliance Ltd. as 1,000/-

    (3)Interest paid 200 on loan from Mr. Rohit was posted to the debit of Rohit’s A/c as 20/-.

    (4)Commission received from Mr. Sonu 500/- is recorded as Commission paid to him.

    (5)Cash withdrawn from Bank1,000 was remained to be recorded.

    (6)Goods sold to Satulal K.Tank of 2,500/- was entered in Purchase return book.

    (7)Goods costing1,000 (selling price 1,500) were distributed as free samples. This transaction was left unrecorded in the books of account.

    (8)A Computer purchased for 30,000 was wrongly debited to cash Purchase Account from the Cash Book.

    (9)A Building Contractor’s bill for extension  of Building for 20,000 stands debited to Building repair A/c.


  33. Trial Balance of Mr. Aashid is not tallying . Following errors were found in the account. Rectify it by passing journal entries and also prepare Suspense A/c

    (1)1,980 received from Hari in settlement of his account of 2,000 was entered in the cash book with interchanged figure of cash and discount column.

    (2)  Goods costing  2,000 (selling price 2,500) were distributed as free samples. This transaction was left recorded in the books of account.
    (3)  Interest on Bank Overdraft debited in Bank Pass Book entered on the receipt side of cash book and posted accordingly 200.
    (4)  Cash withdrawn for the personal use of owner from the Bank A/c of the business 15,000 appears as a withdrawal for office use.
    (5)  A credit sale of a profit of 1,500 was recorded in sales  book. The values of furniture sold was 3,100.
    (6)  Refreshment expenses column of petty cash book was added short by 150.
    (7)  An amount of 1,500 received in respect of bad debts which was written off in the previous year was posted as cash sales.
    (8)  The dividend received on personal investment of the owner bank a/c of the business. his is recorded as the income of the business.

         (9)  Return of goods by Manoj to us 2,980 was posted twice once as a debit 298 to Manoj and for the second time as a credit of 1,982 to Sunoj.



  34. Trial balance of Mr. Haridwar is not tallying. Following errors were found in the account. Rectify it by passing journal entry and also prepare
    Suspense A/c.

         (1)  Sale of machinery for cash 5,000 was recorded in sales book. the cost and accumulated depreciation of machinery was 6,000 and 4,850 respectively.

         (2)  Goods of sales value 5,000 was withdrawn by owner for personal use. This was recorded in sales book. (S. P.= 120%  of cost)

         (3)  We received 9,000 from Mali on his insolvency. We couldn’t recover 1/3rdof the amount due.

         (4)  Cash paid to Laxi  800 was shown in the cash book as 80.

         (5)  Credit purchases of goods from supplier 350 appear on credit side of Suppliers A/c with 3,500.

         (6)  The goods representing sales value 14,000 was lost by fire. The insurance company admitted a claim of 60% of cost. This was recorded with interchanged figure of loss and claim selling price = 120% of cost.

         (7)  The loss of fully insured goods by fire 7,000 was recorded as that of uninsured goods.

         (8)  A crossed cheque of  3,000 was issued to Suraj & Co. and on the same day crossed cheque was received from Suresh Traders for  3,000 and correctly recorded. However Suraj & Co. was credited and Suresh Traders A/c was debited.

         (9)  Carriage paid 2,000 on behalf of customer Mr. Vinita was charged to Carriage A/c.

         (10) Cash balance and Bank Overdraft 2,000 and 8,000 respectively were left out from the trial balance.


  35. Following is the Trial Balance of M/s. Shyam sunder as on 31st March 1998.



















    Petty Cash


    Traveling & Conveyance






    Goods distributed for Advertisement






















    Suspense A/c









    Suspense A/c 2,000 included temporarily to tally the trial balance.

    While checking the books, following errors were found. You are required to:

    (i) Rectify the errors.

    (ii)Prepare Suspense A/c.

    (iii)Prepare the corrected trial balance.

    (1)Creditors Shri Shankar Parekh’s A/c was totaled more by 1,000 on the credit side.

    (2)Petty cash 500 was shown the credit side in the trial balance.

    (3)Rent paid by tanent Mr. Pyarelal  1,000 appears through personal account.

    (4)Personal travelling of proprietor 500 was debited to Travelling and Conveyance A/c.

    (5)Goods costing 5,000 (Selling price 6,000/- ) were distributed as a free sample was

    recorded at selling price.

    (6)A cheque received from Shah of  5,000 was shown on the receipts side of the cash

    book in the cash column.

    (7)Carriage paid 500 on behalf of customer Mr. Manilal was charged to carriage A/c.

    (8)A cheque received of 500 received from a book – debt, Mr. Manilal was charged to

    carriage A/c.

    (9)A cheque received of 500 on personal investment was deposited into the bank and

    credited to Dividend Received A/c.

    (10) Old3machine of book value 5,000 sod on credit to Mr. X 4,000 is passed through Sales Book.

     (ii)                 Dr.       Suspense Account            Cr.



    To Balance b/d


    By Shankar Parekh




    By Petty Cash






             (iii)             Corrected Trial Balance as on 31/ 03/ 2012





    Carriage (2000- 500 Cr. of 7)


    Capital (1,05,300 +500 of 9)




    Sales (90,000 -500 of 8)

    -    4,000 of 10)




    Creditors (15,000 -1,000 of 1)


    Drawings (5,000+500 of 4)


    Rent (At the place of Pyarelal)


    Travelling & conveyance ( 15,800- 500 of 4)


    Goods distributed for Advertisement (6,000- 1,000 of 5)


    Advertisement (10,000 -1,000 of5)


    Dividend (2,000- 500 of 9)


    Bank (20,000+ 5,000 of 6)




    Cash (12,000 -5,000 of 6)




    Debtors (20,000 -500 of 7 -500 of 8)




    Machinery (23,000 – 5,000 of 10)




    Loss on sale of machine








    Petty cash (Dr. 1,000 and Cr. 500)