Stages of Rectification :

The stage in which rectification is done depends on identification or locating the error. Rectification of errors may be explained in two stages.

i. Rectification before the preparation of trial balance : In this stage errors are located before transferring the difference
in the trial balance to Suspense Account.

ii. Rectification after the preparation of trial balance: In this stage the difference in the trial balance would have been transferred to Suspense Account. So wherever applicable suspense account is used while passing rectification entries.

Stage at which the  errors are rectified	Manner in which the  errors are rectified
i. When the errors are rectified before transferring the difference in the trial balance to the suspense account	By debiting or crediting the respective account with the required amount by giving an explanatory note in the particulars column.
ii.When the errors are rectified after transferring the difference in the trial balance to the suspense account	By writing a journal entry with the respective account or accounts affected by the errors and suspense account.

 

Illustration

Rectify the following errors:
i. Purchases book overcast by Rs.1,300
ii. Sales book undercast by Rs.2,500.
iii. Purchases return book overcast by Rs.750.
iv. Sales return book undercast by Rs.600.

Solution:

S.No.	Nature of mistake	Effect of mistake	Rectification
1.	Overcasting of purchases book	Excess debit in Purchases A/c	Credit the Purchases A/c.
2.	Undercasting of sales book	Short credit in Sales A/c	Give further credit Sales A/c.
3.	Overcasting of purchases return book	Excess credit in Purchases Return A/c	Debit Purchases Return A/c
4.	Undercasting of sales return book	Short debit in Sales Return A/c	Give further debit to Sales Return A/c.

 

To rectify the errors:
i. Credit – Purchases A/c with Rs.1,300.
ii. Credit – Sales A/c with Rs.2,500.
iii. Debit – Purchases return A/c with Rs.750.
iv. Debit – Sales return A/c with Rs.600.

Illustration 

Rectify the following errors:

i. Purchases book is carried forward Rs.850 less.

ii. Sales book total is carried forward Rs.2,500 more.

iii. A total of Rs.7,580 in the purchases book has been carried forward as Rs.8,570.

iv. The total of the sales book Rs.7,550 on page 20 was carried forward to page 21 as Rs.5,570.

v. Purchases return book was carried forward as Rs.1,520 instead of Rs.5,120.

Solution:

S.No.	Nature of mistake	Effect of mistake	Rectification
1.	Carrying forward lower amount in purchases book	Short debit in Purchases A/c	Give further debit on Purchases A/c
2.	Carrying forward higher amount in sales book	Excess credit in Sales A/c.	Debit sales A/c
3.	Carrying forward higher amount in purchases book	Excess debit in Purchases A/c	Credit purchases A/c
4.	Carrying forward lower amount in sales book	Short credit in Sales A/c.	Give further credit to Sales A/c
5.	Carrying forward lower amount in purchases return book	Short credit in Purchases return A/c	Credit Purchases return A/c

 

Rectification:
i. Debit – Purchases A/c with Rs.850.
ii. Debit – Sales A/c with Rs.2,500.
iii. Credit – Purchases A/c with Rs.990.
iv. Credit – Sales A/c with Rs.1,980.
v. Credit – Purchases return A/c with Rs.3,600.

Illustration :

Rectify the following errors:

i. Purchases from Bagavathi for Rs.4,500 has been posted to the debit side of her account.

ii. Sales to Vijay for Rs.1,520 has been posted to his credit as Rs.1,250.

iii. Purchases from Shakila for Rs.750 has been omitted to be posted to the personal A/c.

iv. Sales to Khader for Rs.780 has been posted to his account as Rs.870.

Solution:

i. Purchases from Bagavathi should have been posted to the credit of Bagavathi’s A/c., but it has been debited. Hence, Credit Bagavathi’s A/c with double the amount i.e, Rs.9,000.

ii. Sales to Vijay has to be debited in Vijay’s account but his account is credited with Rs.1,250. Hence, Debit Vijay’s A/c with Rs.1,250 + Rs.1,520 i.e, Rs.2,770.

iii. This is an error of omission. Posting must be to the credit of Shakila’s A/c. Hence, post Rs.750 to the credit of Shakila’s A/c.

iv. Here Khader’s A/c has been debited with a wrong amount i.e., with excess amount. To rectify this error, the excess amount must be credited to his account. Hence, credit Khader’s A/c with Rs.90.

Illustration

The following errors were found in the books of Prabhu. Give the necessary entries to correct them:

i) Salary of Rs.10,000 paid to Murali has been debited to his personal account.

ii) Rs.3,500 paid for a typewriter was charged to office expenses account.

iii) Rs.8,000 paid for furniture purchased has been charged to purchases account.

iv) Repairs made were debited to building account for Rs.500.

v) An amount of Rs.5,000 withdrawn by the proprietor for his personal use has been debited to trade expenses account.

vi) Rs.2,000 received from Shanthi & Co. has been wrongly entered as from Shakila & Co.

Solution:

In the Books of Prabhu
Rectifying Journal Entries

Errors	Particulars	L.F	Debit Rs.	Credit Rs.
i.	Salaries A/c                                                                 Dr.		10,000
	To Murali A/c.			10,000
	[Correction of wrong debit to Murali’s personal A/c for salaries paid]
ii.	Typewriter A/c                                                     Dr.		3,500
	To Office expenses A/c			3,500
	[Correction of wrong debit to office expenses A/c for purchase of typewriter]
iii.	Furniture A/c                                                        Dr.		8,000
	To Purchases A/c			8,000
	[Correction of wrong debit to purchases account for furniture purchased]
iv.	Repairs A/c                                                          Dr.		500
	To Building A/c			500
	[Correction of wrong debit to building Account for repairs made]
v.	Drawings A/c                                                         Dr.		5,000
	To Trade expenses A/c			5,000
	[Correction of wrong debit to Trade Expenses A/c. for cash withdrawn by the proprietor for his personal use]
vi.	Shakila & Co. A/c.                                              Dr.		2,000
	To Shanthy & Co. A/c			2,000
	[Correction of wrong credit to Shakila & Co. instead of Shanthi & Co.]

 

Illustration 8

Give journal entries to rectify the following errors:

i. Purchase of goods from Devi amounting to Rs.25,000 has been wrongly passed through the sales book.

ii. Credit sale of goods Rs.30,000 to Rajan has been wrongly passed through the purchases book.

iii. Sold old furniture for Rs.3,500 passed through the sales book.

iv. Paid wages for the construction of Building debited to wagesaccount Rs. 1,00,000.

v. Paid Rs.10,000 for the installation of Machinery debited to wages account.

vi. On 31st Dec. 2003 goods worth Rs.5,000 were returned by Manjula and were taken into stock on the same date, but no entry was passed in the books.

Solution:

Rectifying Journal Entries

Errors	Particulars	L.F	Debit Rs.	CreditRs.
i.	Purchases A/c                                                            Dr.		25,000
	Sales A/c                                                                      Dr.		25,000
	To Devi A/c			50,000
	[Correction of wrong entry in sales book for a credit purchase from Devi]
ii.	Rajan A/c                                                                    Dr.		60,000
	To Purchases A/c			30,000
	To Sales A/c			30,000
	[Correction of wrong entry in purchases book for credit sale to Rajan]
iii.	Sales A/c                                                                      Dr.		3,500
	To Furniture A/c			3,500
	[Correction of wrong credit to sales account for sale of old furniture]
iv.	Building A/c                                                               Dr.		1,00,000
	To Wages A/c			1,00,000
	[Correction of wrong debit to wages account for wages paid for construction of building]
v.	Machinery A/c                                                        Dr.		10,000
	To Wages A/c			10,000
	[Correction of wrong debit to wages account for wages paid for installation of machinery]
vi.	Sales Return A/c                                                     Dr.		5,000
	To Manjula A/c			5,000
	[Entry for goods returned and taken into stock]

 

Illustration 

An accountant could not tally the Trial balance. The difference of Rs.5,180 was temporarily placed to the credit of suspense account for preparing the final accounts. The following errors were later located.

i. Commission of Rs.500 paid, was posted twice, once to discount allowed account and once to commission account.

ii. The sales book was undercast by Rs.1,000.

iii. A credit sale of Rs.2,780 to Roja though correctly entered in sales book, was posted wrongly to her account as Rs.3,860.

iv. A credit purchase from Nataraj of Rs.1,500, though correctly entered in purchases book, was wrongly debited to his personal account

v. Discount column of the payments side of the cash book was wrongly added as Rs.2,800 instead of Rs.2,400.

You are required to:

i. Pass the necessary rectifying entries.

ii. Prepare Suspense Account

Solution:

Rectifying Journal Entries

Errors	Particulars	L.F	Debit Rs.	Credit Rs.
i.	Suspense A/c                                                      Dr.		500
	To Discount allowed A/c			500
	[Amount wrongly debited to discount account, now rectified]
ii.	Suspense A/c                                                      Dr.		1,000
	To Sales A/c			1,000
	[Sales book undercast by Rs.100, now rectified]
iii.	Suspense A/c                                                      Dr.		1,080
	To Roja A/c			1,080
	[Wrong posting of sale of Rs.2,780 to Roja as Rs.3,860, now rectified]
iv.	Suspense A/c                                                     Dr.		3,000
	To Nataraj A/c			3,000
	[Credit purchase of Rs.1,500 from Nataraj wrongly debited to his personal account now rectified]
v.	Discount received A/c                                       Dr.		400
	To Suspense A/c			400
	[Excess credit in discount account, now rectified]

Suspense Account
Dr.                                                                                                                                                                                                                                                  Cr.

Date	Particulars	L.F	Rs.	Date	Particulars	L.F	Rs.
	To Discount By  allowed A/c		500		Balance b/d		5,180
	To Sales A/c		1,000		By Discount received A/c		400
	To Roja A/c		3,000
	To Nataraj A/c		3,000				______
			5,580				5,580