Rectification of Errors Journal Entries
Method of Rectification of Error depends upon the stage at which the error where it occur and where it is rectified.If any error is occur in the books original Entry and before posting of ledger it may be corrected by neatly crossing out the wrong figure by a single line and writing the correct figure above the crossed figure.
If however an error is located after some time it should be corrected by passing a suitable journal entry called Rectifying Entry.
From the rectification point of view all errors can be classified into the following two categories :
- Error which do not affect the trial balance or two side errors
- Error which affect the trail balance or one side errors.
Error which do not affect the trial balance or two side errors
a) When an account has wrongly been debited in place of another accounts.
Example :
Machinery purchased for Rs 100000 has been debited to Purchase A/c
Method of rectification:
solution :
correct entry :
Machinery A/c dr 100000
To cash A/c 100000
(being machinery purchased)
Wrong entry :
Purchased A/c Dr 100000
To cash A/c 100000
(being goods purchased )
Compare :
Now compare wrong entry with correct entry and make rectifying entry in this case we have to Debit Machinery a/c but we did not do that and debit wrong a/c purchase now To rectify we have to debit Machinery a/c and to cancel purchase we have to credit purchase.
Therefore rectifying entry will be:
Machinery A/c Dr 100000
To Purchase A/c 100000
(being rectification entry)
b) When an account has wrongly been credited in place of another account
Example :
Rs 5000 being sale of old furniture has been credited to sale A/c
Method of rectification:
solution :
correct entry :
cash A/c 5000
To Furniture A/c 5000
(being furniture sold)
Wrong entry :
Cash A/c Dr 5000
To sale A/c 100000
(being goods sale )
Compare :
Now compare wrong entry with correct entry and make rectifying entry in this case we have to credit Furniture a/c but we did not do that and Credit wrong a/c sale now To rectify we have to credit Furniture a/c and to cancel sale we have to Debit Sale A/c.
Note : it is assumed that cash is rightly debited
Therefore rectifying entry will be:
Sale A/c Dr 5000
To Furniture A/c 100000
(being rectification entry)
c) When there is short debit in one account and short credit in another account
Example :
Goods purchased form Ram for Rs 2000 was entered in purchase book as Rs 200 only.
Method of rectification:
solution :
correct entry :
Purchase A/c 2000
To Ram A/c 2000
(being goods purchased)
Wrong entry :
Purchase A/c Dr 200
To Ram A/c 200
(being goods purchased)
Compare :
Now compare wrong entry with correct entry and make rectifying entry in this case we have debited and credited account by 1800 short now in recitifying entry we have to debit and credit Rs 1800
Therefore rectifying entry will be:
Purchase A/c Dr 1800
To A/c 1800
(being rectification entry)
d) When there is excess debit in one account and an excess credit in another account
Example :
Goods sold to Sohan For Rs 38o on credit was recorded in sale book as Rs 830
Method of rectification:
solution :
correct entry :
Sohan A/c 380
To Sale A/c 380
(being goods sold)
Wrong entry :
Sohan A/c Dr 830
To sale A/c 830
(being goods sold)
Compare :
Now compare wrong entry with correct entry and make rectifying entry in this case we have debited and credited account by 450 excess now in recitifying entry we have to debit and credit Rs 450
Therefore rectifying entry will be:
sale A/c Dr 450
To SohanA/c 450
(being rectification entry)
Error which affect the Trial Balance or One sided Error
- When a subsidiary book is under cast or overcast
- When a posting is made on the wrong side of account.
- When the posting to an account is altogether omitted
- When the posting of a wrong amount is done.
Now error depends on the stage at which the error are located
- when the error are located and rectified before the closing of accounts.
- When the error are located and rectified after the closing of accounts after preparing the trial balance.
when the error are located and rectified before the closing of accounts.
Example :
Sohan found that the trial balance did not agree he traced followitng error
The post Rectification of Errors Journal Entries appeared first on Best Tally Accounts Finance Taxation Bank Coaching Institute in dehradun.
This post first appeared on Coaching Tally Accounts & Finance ,taxation,bankin, please read the originial post: here