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)