Question

A Book-keeper finds that the totals of his trial balance disagree by ₹ 2,800. He temporarily debits a Suspense Account with this amount and closes the books. On an examination of the books, the following errors are discovered:-
1. The total of Purchase Return Book ₹ 710 was posted Twice.
2. Goods costing ₹ 800 were distributed as free samples but no entry was passed in the books.
3. Purchase of Machinery for ₹ 5,600 on credit was recorded in Purchase Book as ₹ 6,500.
4. Cash Sales to Ram Lal for ₹ 1,200 were recorded in Cash Book as well as in Sales Book and were posted from both.
5. Closing Stock has been overvalued by ₹ 1,500.
6. Sales Return Book was untotalled, though personal accounts were posted ₹ 1,580.
7. No entries have been made in the Cash Book for the Insurance Premium directly paid by bank ₹ 700 and interest charged on overdraft ₹ 320.
8. A sum of ₹ 200 for Drawings on the Credit Side of Cash Book was not posted to the Drawings account.
Pass entries to rectify the above errors. Close the Suspense Account already opened.

Answer 1

One Sided Errors

Journal
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
1)	Purchases Return A/c	Dr.		710
	To Suspense A/c				710
	(Total of purchases return book posted twice)
2)	Advertisement Expenses A/c	Dr.		800
	To Purchases A/c				800
	(Goods distributed as free samples omitted to be recorded)
3)	Creditors A/c	Dr.		900
	Machinery A/c	Dr.		5,600
	To Purchases A/c				6,500
	(Purchase of machinery for Rs 5,600 recorded in Purchases Account as Rs 6,500)
4)	Sales A/c	Dr.		1,200
	To Ram Lal’s A/c				1,200
	(Cash sales wrongly entered in Sales Book)
5)	Trading A/c	Dr.		1,500
	To Closing Stock A/c				1,500
	(Closing stock overvalued)
6)	Sales Return A/c	Dr.		1,580
	To Suspense A/c				1,580
	(Omitted totalling of Sales Return Book)
7)	Insurance Premium A/c	Dr.		700
	Interest on Overdraft A/c	Dr.		320
	To Bank A/c				1,020
	(Recording is made for payment of insurance premium and interest charged on overdraft)
8)	Drawings A/c	Dr.		200
	To Suspense A/c				200
	(An amount of Rs 200 omitted to be posted to Drawings Account)

Suspense Account
Dr.				Cr.
Particulars		Amount (Rs)	Particulars		Amount (Rs)
Difference as per Trial Balance		2,800	Purchases Return A/c		710
			Sales Return A/c		1,580
			Drawings A/c		200
			Balance b/d		310
		2,800			2,800