Trial Balance and Rectification of Errors

period. You will learn about this aspect at an advanced stage of your studies in accounting. Box Guiding Principles of Rectification of Errors . If error is committed in books of original entry then assume all postings are done accordingly.

. If error is at the posting stage then assume that recording in the subsidiary books has been correctly done. . If error is in posting to a wrong account (without mentioning side and amount of posting) then assume that posting has been done on the right side and with the right amount.

. If posting is done to a correct account but with wrong amount (without mentioning side of posting) then assume that posting has been done on the correct side. . If error is posting to a wrong account on the wrong side (without mentioning amount of posting) then assume that posting has been done with the amount as per the original recording of the transaction.

. If error is of posting to a wrong account with wrong amount (without mentioning the side of posting) then assume that posting has been done on the right side. . If posting is done to a correct account on the wrong side (without mentioning amount of posting) then assume that posting has been done with correct amount as per original recording.

. Any error in posting of individual transactions in subsidiaries books relates to individual account only, the sales account, purchase account, sales return account or purchases return account are not involved. . If a transaction is recorded in cash book, then the error in posting relates to the other affected account, not to cash account/bank account .

If a transaction is recorded through journal proper, then the phrase ‘transaction was not posted’ indicates error in both the accounts involved, unless stated otherwise. . Error in casting of subsidiary books will affect only that account where total of the particular book is posted leaving the individual personal accounts unaffected. Test Your Understanding - III Show the effect through Journal entries : .

Credit sales to Mohan Rs. , were posted to his account as Rs. , This is an error of .................................. The wrong effect has been : The correct effect should have been : The rectification entry will be.

. Cash paid to Neha Rs. , was not posted to her account. This is an error of ..................................

The wrong effect has been : The correct effect should have been : The rectification entry will be : . Sales returns from Megha Rs. , were posted to her account as Rs. , .

This is an error of .................................. The wrong effect has been : The correct effect should have been : The rectification entry will be : . Depreciation written off on furniture Rs. , was not posted to depreciation account.

This is an error of ................ The wrong effect has been : The correct effect should have been : The rectification entry : Illustration Rectify the following errors : Credit purchases from Raghu Rs. , were not recorded. were recorded as Rs.

, . (iii) were recorded as Rs. , . (iv) were not posted to his account.

(v) were posted to his account as Rs. , . (vi) were posted to Reghav’s account. (vii) were posted to the debit of Raghu’s account.

(viii) were posted to the debit of Raghav. (ix) were recorded through sales book. Solution Purchases A/c To Raghu’s A/c (Credit purchases from Raghu omitted to be recorded, now corrected) Purchases A/c To Raghu’s A/c (Credit purchases from Raghu recorded as Rs. , instead of Rs , , now corrected) (iii) Raghu’s A/c To Purchases A/c (Credit purchases from Raghu recorded as Rs.

, instead of Rs. , ). (iv) Suspense A/c To Raghu’s A/c (Credit purchases from Raghu not posted to his account now corrected). (v) Suspense A/c , To Raghu’s A/c , (Credit purchases from Raghu Rs.

, posted to his account as Rs. , (vi) Raghav’s A/c To Raghu’s A/c (Credit purchases from Raghu wrongly credited to Raghav, now corrected) (vii) Suspense A/c , To Raghu’s A/c , (Credit purchases from Raghu Rs. , wrongly posted to the debit of his account, now corrected). (viii) Suspense A/c , To Raghav’s A/c To Raghu’s A/c (Credited purchases from Raghu Rs.

, wrongly debited to Raghav, now corrected). (ix) Sales A/c Purchases A/c To Raghu’s A/c , (Credit purchases from Raghu wrongly recorded through sales book, now corrected). Illustration Rectify the following errors : Cash sales Rs. , were not posted to sales account.

were posted as Rs. , in sales account. (iii) were posted to commission account. Solution Suspense A/c , , (Cash sales not posted to sales account now rectified) Suspense A/c (Cash sales Rs.

, were posted to sales account as Rs. , , now rectified) (iii) Commission A/c , , (Cash sales posted to commission account instead of sales account, now corrected) Illustration Depreciation written-off as the machinery Rs. , was not posted at all was not posted to machinery account (iii) was not posted to depreciation account Solution It was recorded through journal proper. From journal proper posting to all the accounts are made individually.

Hence, no posting was made to depreciation account and machinery account. Therefore, rectification entry will be : Depreciation A/c To Machinery A/c (Depreciation on machinery not posted, now corrected) In this case posting was not made to machinery account. It is to be assumed that depreciation account should have been correctly debited. Therefore, rectification entry shall be : Suspense A/c To Machinery A/c (Depreciation on machinery not posted to Machinery account, now corrected).

(iii) In this case depreciation account was not been debited. However, machinery account must have been correctly credited. Therefore, rectification entry shall be : Depreciation A/c To Suspense A/c (Depreciation on machinery not posted to Depreciation account, now corrected). Illustration Trial balance of Anurag did not agree.

It showed an excess credit Rs. , . Anurag put the difference to suspense account. He located the following errors : Sales return book over cast by Rs.

, . Purchases book was undercast by Rs. . (iii) In the sales book total of page no.

was carried forward to page as Rs. , instead of Rs. , and total of page was carried forward to page as Rs. , instead of Rs.

, . (iv) Goods returned to Ram Rs. , were recorded through sales book. (v) Credit purchases from M & Co.

Rs. , were recorded through sales book. (vi) Credit purchases from S & Co. Rs.

, were recorded through sales book. However, S & Co. were correctly credited. (vii) Salary paid Rs.

, was debited to employee’s personal account. Solution Suspense A/c To Sales Return A/c (Sales returns book overcast by Rs. , , now corrected). Purchases A/c To Suspense A/c (Purchases book undercast by Rs.

, now corrected) (iii) Sales A/c To Suspense A/c (Error in carry forward of sales book, now corrected). Note : Errors in carry forward the total of one page to another during a period finally affects the total of that book resulting in error of under/overcastting. In this case, carry forward from page to resulted in undercasting of Rs. and carry forward from page to page resulted in overcasting of Rs.

. Overall overcastting being Rs. – = Rs. .

(iv) Sales A/c To Return Outwards A/c (Return Outwards wrongly recorded through sales book, now rectified). (v) Purchases A/c , Sales A/c , To M & Co.’s A/c , (Credit purchases wrongly recorded through sales book, now rectified). (vi) Purchases A/c Sales A/c To Suspense A/c (Credit purchases wrongly recorded through sales book, however suppliers account correctly credited, now rectified). (vii) Salary A/c To Employee’s personal A/c (Salary paid wrongly debited to employee’s personal account, now corrected) Suspense Account Date Particulars Amount Date Particulars Difference as per trial balance Purchases Sales return Sales Purchases Sales , , Illustration Trial balance of Rahul did not agree.

Rahul put the difference to suspense account. Subsequently, he located the following errors : Wages paid for installation of Machinery Rs. was posted to wages account. Repairs to Machinery Rs.

debited to Machinery account. (iii) Repairs paid for the overhauling of second hand machinery purchased Rs. , was debited to Repairs account. (iv) Own business material Rs.

, and wages Rs. , were used for construction of building. No adjustment was made in the books. (v) Furniture purchased for Rs.

, was posted to purchase account as Rs. . (vi) Old machinery sold to Karim at its book value of Rs. , was recorded through sales book.

(vii) Total of sales returns book Rs. , was not posted to the ledger. Rectify the above errors and prepare suspense account to ascertain the original difference in trial balance. Machinery A/c To Wages A/c (Wages paid for installation of machinery wrongly debited to wages account, now rectified) Repairs A/c To Machinery A/c (Repairs paid wrongly debited to machinery account now rectified) (iii) Machinery A/c To Repairs A/c (Repairs for overhauling of second hand machinery purchased, wrongly debited to repairs account, now rectified).

(iv) Building A/c To Purchases A/c , To Wages A/c (Material and wages used for construction of Building, not debited to building account). (v) Furniture A/c To Purchases A/c To Suspense A/c , (Furniture purchased for Rs. , wrongly debited to purchases account as Rs. , now rectified).

(vi) Sales A/c To Machinery (Sale of machinery wrongly recorded in sales book, now rectified). (vii) Sales Return A/c , To Suspense A/c , (Total of sales returns book not posted to ledger, now rectified). Suspense Account Date Particulars Amount Date Particulars Difference as per , Furniture , trial balance Sales return . , , Hence, original difference in Trial Balance was Rs.

, excess on the Credit side. Illustration Trial balance of Anant Ram did not agree. It showed an excess credit of Rs. , .

He put the difference to suspense account. Subsequently the following errors were located: Cash received from Mohit Rs. , was posted to Mahesh as Rs. , .

Cheque for Rs. , received from Arnav in full settlement of his account of Rs. , , was dishonoured. No entry was passed in the books on dishonour of the cheque.

(iii) Rs. received from Khanna, whose account had previously been written off as bad, was credited to his account. (iv) Credit sales to Manav for Rs. , was recorded through the purchases book as Rs.

, . (v) Purchases book undercast by Rs. , . (vi) Repairs on machinery Rs.

, wrongly debited to Machinery account as Rs. , . (vii) Goods returned by Nathu Rs. , were taken into stock.

No entry was recorded in the books. Solution Mahesh’s A/c Suspense A/c , To Mohit’s A/c , (Cash received from Mohit Rs. , wrongly posted to Mahesh as Rs. , , now rectified) Arnav’s A/c , To Bank A/c , To Discount Allowed A/c (Cheque received from Arnav for Rs.

, in full settlement of his account of Rs. , , dishonoured but no entry made in books, now rectified) (iii) Khanna’s A/c To Bad debts recovered A/c (Bad debts recovered wrongly credited to Khanna’s account, now rectified) (iv) Manav’s A/c , To Purchases A/c (Credit sales to Manav Rs. , wrongly recorded through purchases book as Rs. , , now rectified) (v) Purchases A/c To Suspense A/c (Purchases book undercast by Rs.

, ) (vi) Repairs A/c , To Machinery A/c To Suspense A/c (Repairs on machinery Rs. , wrongly debited to machinery account as Rs. , , now rectified) (vii) Sales Return A/c , To Nathu’s A/c , (Sales return from Nathu not recorded) Suspense Account Date Particulars Amount Date Particulars Difference as per Purchases trial balance , Repairs Mohit , Balance c/d , , , Note : Even after rectification of errors suspense account is showing a debit balance of Rs. , .

This is due to non-detection of errors affecting trial balance. Balance of suspense account will be carried forward to the next year and will be eliminated as and when all the remaining errors affecting trial balance are located. Illustration Trial balance of Kailash did not agree. He put the difference to suspense account.

The following errors were discovered : Goods withdrawn by Kailash for personal use Rs. were not recorded in the books. Discount allowed to Ramesh Rs. on receiving Rs.

, from him was not recorded in the books. (iii) Discount received from Rohan Rs. on paying Rs. , to him was not posted at all.

(iv) Rs. received from Khalil, a debtor, whose account had earlier been written-off as bad, were credited to his personal account. (v) Cash received from Govil, a debtor, Rs. , was posted to his account as Rs.

. (vi) Goods returned to Mahesh Rs. were posted to his account as Rs. .

(vii) Bill receivable from Narayan Rs. , was dishonoured and wrongly debited to allowances account as Rs. , . Give journal entries to rectify the above errors and prepare suspense account to ascertain the amount of difference in trial balance.

Solution. Drawings A/c To Purchases A/c (Goods withdrawn by proprietor for personal use not recorded, now rectified). Discount allowed A/c To Ramesh’s A/c (Discount allowed to Ramesh not recorded, now rectified) (iii) Rohan’s A/c To Discount received A/c (Discount received from Rohan not posted , now corrected) (iv) Khalil’s A/c To Bad debts recovered A/c (Bad debts recovered wrongly credited to debtor’s personal account, now corrected) (v) Suspense A/c , To Govil’s A/c , (Cash received from Govil Rs. , wrongly posted to his account as Rs.

) (vi) Mahesh’s A/c To Suspense A/c (Goods returned to Mahesh Rs. wrongly posted to his account as Rs. , now corrected) (vii) Narayan’s A/c Suspense A/c , To Allowances A/c (Bill receivables from Narayan Rs. , wrongly debited to allowances account as Rs.

, ). Suspense Account Date Particulars J.F. Amount Date Particulars J.F. Amount Govil , Mahesh Allowances , Difference as per , trial balance , , Test Your Understanding - IV Tick the Correct Answer ( ) Agreement of trial balance is affected by: (a) One sided errors only.

Two sided errors only. Both a and b. ( d ) None of the above. ( ) Which of the following is not an error of principle: (a) Purchase of furniture debited to purchases account.

( b ) Repairs on the overhauling of second hand machinery purchased debited to repairs account. Cash received from Manoj posted to Saroj. Sale of old car credited to sales account. ( ) Which of the following is not an error of commission: (a) Overcasting of sales book.

Credit sales to Ramesh Rs. , credited to his account. Wrong balancing of machinery account. Cash sales not recorded in cash book.

( ) Which of following errors will be rectified through suspense account: ( a ) Sales return book undercast by Rs. , . Sales return by Madhu Rs. , not recorded.