The Trial Balance of Mr. Sarvesh Kumar as on 31st March, 2024 did not tally and the difference was posted to Suspense Account. On a scrutiny of the...

Question

The Trial Balance of Mr. Sarvesh Kumar as on 31st March, 2024 did not tally and the difference was posted to Suspense Account. On a scrutiny of the books, the following errors were detected: (i) The total of Sales Returns Book for January 2024 has been casted short by 1,000. (ii) Freight paid for installation of a Machine 6,500 was posted to the Freight Account as 5,600. (iii) Goods of the value of 2,500 returned by a customer were entered in the Sales day Book and posted therefrom to the credit of his account. (iv) 18,000 paid for purchase of old Motorcycle for personal use of Mr. Sarvesh Kumar was debited to conveyance account. (v) A purchase of ₹ 6,700 had been posted to creditor's account as 6,000. (vi) Receipt of cash ₹ 5,000 from Mr. Avinash was posted to the debit of his account. (vii) A cheque for 2,500 received from Mr. Alok had been dishonoured and was posted to the debit of Mr. Ashok. (viii) Sale of 8,500 to Mr. Deepak was recorded in the sales book correctly but while posting in ledger credited to his account. (ix) The total of "Discount Allowed" column in the cash book for the month of December 2023 amounting to 3,800 was not posted. (x) Sale of old office table for 2,200 treated as sale of goods. You are required to pass necessary journal entries with narrations to rectify the above errors. [June 2024, 12 Marks]

Accepted Answer

Answer Solution: In the books of Mr. Sarvesh Kumar Journal Entries S. No. Particulars Debit Credit 1 Sales Return A/c Dr. To Suspense A/ c (Being sales return book casted short, now rectified) 1,000 - - 1,000 2 Machinery A/ c Dr. To Freight A/ c To Suspense (Being freight paid on machinery wrongly posted to freight account, now rectified) 6,500 - - 5,600 900 3 Sales A/ c Dr. Sales Return A/ c Dr. To Suspense A/ c (Being sales return wrongly entered as sales and therefrom posted to credit of customer account, now rectified) 2,500 2,500 - - - 5,000 4 Drawing A/ c Dr. To Conveyance A/ c (Being motorcycle purchased for personal use debited to conveyance account, now rectified) 18,000 - - 18,000 5 Suspense A/ c Dr. To Creditors A/ c (Being creditors account posted short, now Rectified) 700 - - 700 6 Suspense A/ c Dr. To Avinash A/ c (Being amount posted to wrong side, now rectified) 10,000 - - 10,000 7 Alok A/ c Dr. To Ashok A/ c (Being amount debited to wrong account, now rectified) 2,500 - - 2,500 8 Deepak A/ c Dr. To Suspense A/c (Being sales wrongly posted to the credit of customer account, now rectified) 17,000 - - 17,000 9 Discount A/c Dr. To Suspense A/ c (Being total of discount allowed column not posted, now rectified) 3,800 - - 3,800 10 Sales A/c Dr. To Office Furniture A/ c (Being sale of furniture wrongly treated as sales, now rectified) 2,200 - - 2,200

Detailed Solution & Explanation

About This Chapter: Accounting Process

Key Concepts to Understand

Trial Balance

Ledger

Suspense Account

Sale of Goods

Related Comparison Tables

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