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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 Rs 800.
(b) Purchases return to Sahu Rs 2,000 were not posted.
(c) Goods purchased on credit from Narula Rs 4,000 though taken into stock, but no entry was passed in the books.
(d) Installation charges on new machinery purchased Rs 500 were debited to sundry expenses account as Rs 50.
(e) Rent paid for residential accommodation of madam (the proprietor) Rs 1,400 was debited to rent account as Rs 1,000.
Rectify the errors and prepare suspense account to ascertain the difference in trial balance.┬а



Answer -

Journal Recordings to rectify the errors

┬а

Date

Particulars

L.F

Debit
Amount
тВ╣

Credit
Amount
тВ╣

i.

Suspense A/c Dr.

800

To Sales Return A/c

(Sales return, Error rectification recording, Sales return book was overcast by тВ╣┬а800)

800

ii.

SahuтАЩs A/c Dr.

2,000

To Purchases Return A/c

(Purchases return to Sahu, Error rectification recording, was not recorded earlier)

2,000

iii.

Purchases A/c Dr.

4,000

To NarulaтАЩs A/c

(Goods purchased on credit from Narula, Error rectification recording, was not recorded earlier)

4,000

iv.

Machinery A/c Dr.

500

To Sundry Expenses A/c

50

To Suspense A/c

(Installation charges on new machinery purchased, Error rectification recording, Earlier Sundry expenses account was debited with тВ╣┬а50 instead of crediting the machinery account with тВ╣┬а500)

450

v.

Drawings A/c Dr.

1,400

To Rent A/c

1,000

To Suspense A/c

(Drawings by the proprietor for paying the personal rent, Error rectification recording, Earlier Rent account was debited with тВ╣┬а1,000 instead of debiting the drawings account with тВ╣┬а1,400)

400

┬а

Suspense Account

Dr.

Cr.

Date

Particulars

J.F.

Amount
тВ╣

Date

Particulars

J.F.

Amount
тВ╣

To Sales Return A/c

800

By Machinery A/c

450

To Balance c/d

50

By Drawings A/c

400

Total

850

Total

850

The credit balance isтВ╣50 as per the question.

As per textbook theanswer is тВ╣2050, therefore the entry (b) is added to suspense account and theresulting amount is тВ╣2050.

┬а

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