Question

Trial balance of Madan did not agree and he put the difference to suspense account. He discovered the following errors:
(a) Sales return book overcast by ₹ 800.
(b) Purchases return to ₹ 2,000 was not posted.
(c) Goods purchased on credit from ₹ 4,000 though taken into stock, but no entry was passed in the books.
(d) Installation charges on new machinery purchased ₹ 500 were debited to sundry expenses account as ₹ 50.
(e) Rent paid for residential accommodation of madam (the proprietor) ₹ 1,400 was debited to rent account as ₹ 1,000.

Answer 1

Journal
S.No.	Particulars	L.F.	Debit Amount ₹	Credit Amount ₹
(a)	Suspense A/c Dr.		800
	To Sales Return A/c			800
	(Sales Return Book overcast by ₹ 800, now rectified)
(b)	Sahu Dr.		2,000
	To Purchases Return A/c			2,000
	(Goods returned to Sahu, were not posted, now rectified)
(c)	Purchases A/c Dr.		4,000
	To Narula			4,000
	(Goods purchased from Narula were not posted, now rectified)
(d)	Machinery A/c Dr.		500
	To Sundry Expense A/c			50
	To Suspense A/c			450
	(Installation charges on machinery ₹ 500 wrongly debited to Sundry Expenses Account as ₹ 50, now rectified)
(e)	Drawings A/c Dr.		1,400
	To Rent A/c			1,000
	To Suspense A/c			400
	(Rent paid for residential accommodation of proprietor as ₹ 1,400. was posted to Rent Account as ₹ 1,000, now rectified)

 

Dr.	Suspense Account						Cr.
S.No.	Particulars	J.F.	Amount ₹	S.No.	Particulars	J.F.	Amount ₹
(a)	Sales Return		800	(d)	Machinery		450
	Balance c/d		50	(e)	Drawings		400
			850				850

Note:

As per the solution Suspense Account shows a credit balance of ₹ 50.

However, as per the answer given in the book, it is a credit balance of ₹ 2050.

In order to match answer with the book item (b) is taken as, ‘Purchases return to Sahu ₹ 2,000 were not posted to Sahu’s Account.’

Thus, the rectifying entry for this error will be as:

Sahu's A/c  Dr.	2,000
To Suspense A/c		2,000