example of rectification of errors - illustration 1

Illustration 1

Rectify the following error and find out the effect of the errors on Net Profit.

a. Purchases of Rs.300 from Raman passed through Sales Book.
b. Bill received from Ramu for Rs.500 passed through Bills Payable Book.
c. An item of Rs.150 relating to Prepaid Rent was omitted to be brought forward from last year.
d.Rs.400 paid to Mehta B, against our acceptance was debited to Mehta N.
e. Received Rs 300 from Ajit(whose account for Rs.300 was written off earlier) and posted to the credit of Amrit
f. Transistor sold to Karun for Rs.750 passed through Sales Book twice.

Solution:


Journal Entries



Rs.
Rs.
a.
Purchases Account Dr

300


Sales Account          Dr
300


To Raman Account

600

(Being the amount passed through sales book cancelled and debited to purchases book)






b.
Bills Receivable Account Dr

500


Bills Payable Account Dr
500


            To Ramu's Account

1000

(Being the amount cancelled passed through bills payable book and debited to bills received account)






c.
Prepaid Insurance Account Dr

150


            To Suspense Account

150

(Being prepaid Insurance omitted to bring into books of accounts earlier, now brought into books of accounts)






d.
Bills Payable Account Dr

400


            To N. Mehta Account

400

(Being the amount wrongly debited to N. Mehta cancelled)






e.
Ajit account Dr

300


Amrit account Dr
300


              To Bad Debts Recovered Account

600

(Being the amount credited to Ajit account cancelled and credited to Bad debts recovered)






f.
Sales Account     Dr

750


              To Karun Account

750

(Being wrong credit given to sales account cancelled)












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