Question

A cheque for Rs$7,330$ was received from Rao after allowing him a discount of Rs$70$. It was endorsed in favour of Sen in full settlement of Rs$7,500$. The cheque was dishonoured, but no entry for dishonor was passed in the books. If this error located after preparation of final account then which of the following rectification entry is correct?

• A. Rao A/c Dr. $7,400$
  Profit & Loss Adj. A/c Dr. $100$
  To Sen A/c $7,500$
• B. Rao A/c Dr. $7,400$
  Profit & Loss Adj. A/c Dr. $100$
  To Suspense A/c $7,500$
• C. Rao A/c Dr. $100$
  Profit & Loss Adj. A/c Dr. $7,400$
  To Sen A/c $7,500$
• D. Rao A/c Dr. $100$
  Profit & Loss Adj. A/c Dr. $7,400$
  To Suspense A/c $7,500$

Answer 1

Answer: (A)

Rao A/c Dr. $7,400$

Profit & Loss Adj. A/c Dr. $100$
To Sen A/c $7,500$

If an error is detected after the final accounts have been prepared, it will be adjusted through P & L adjustment account. Hence the rectification entry eill be:-

Rao A/c Dr 7,400

Profit and loss adj. A/c Dr 100

To sen A/c 7,500