Question

2. Show the Ledger accounts and journal entries with suitable narration, how you would correct the following errors, assuming that a Suspense account has been prepared.

a. A cheque for S$50 received from B Bull had been debited in the Cash Book and also debited in B Bull’s account.

b. Goods sold on credit to A Chan, to the value of S$1,000 have been correctly entered in the Sales Book but has been posted to A. Chan’s account as S$900.

c. The purchase of Office Equipment, valued at S$200 from B Song on credit had been posted to the debit of Purchases account and to the credit of B. Song’s account.

Answer 1

While preparing trial balance at the end of a fiscal year, if both sides of the trial balance are not tallying, it means that some error is occurred in the preparation of books of account.
On identification, a rectification entry should be passed. If needed a temporary account named suspense account also can be opened for making entry for one sided errors.

The rectification journal entries and ledger accounts are given below.

Working note:

a. Cheque received is debited properly to cash account, but instead of crediting to B Bull's account, it is debited to his account. Hence, B Bull's account is credited and suspense account is debited because it is a one sided error.

b. Goods sold for S$1,000 is correctly entered in sales book but posted to A Chan's account S$100 less. It is also a one sided error. Hence, suspense account is credited and A Chan's account is debited with S$100.

c. Purchase of office equipment wrongly posted to debit of purchase account and correctly credited to B Song's account. For this, office equipment account is debited for entering office equipment posting and purchase account is credited to cancel the debit posting.