Question

(a) Give necessary Journal entries to rectify the following errors:

(i) Rent received : 1,000 was wrongly entered as commission received : 1,000 in the Cash Book.

(ii) 2,500 paid for rent, has been wrongly debited to Interest Account.

(iii) An amount of 8,000 received on account of interest, was credited wrongly to Commission Account.

(iv) 35,000 paid for the purchase of a motor cycle to proprietor has been charged to Miscellaneous Expenses Account.

(v) Contractor's Bill of 27,500 for expansion of building was wrongly debited to Repairs Account.

(vi) 5,000 paid in installment to an injured worker for compensation. The worker's compensation claim was debited to Wages Account.

(b) Goods worth : 10,000 returned by Keshwari were taken into stock but the transaction was not recorded by Mr. Shaad (accountant) in the books of accounts as he was doing some of his personal work and left the company after office hours, not caring for the transaction to be entered in the books of accounts.

(i) Identify the value missing in the above case.

(ii) Rectify the error.

Or

Write the following transactions in Cash Book with Discount and Bank Columns:

Jan. 1 Opening balance of cash : 2,00,000.

Jan. 3 He pays : 1,80,000 into Bank's Current A/c.

Jan. 4 He receives cheque of =6,000 from Kirti & Co., on account.

Jan. 7 He pays into Bank Kirti & Co's cheque for : 6,000.

Jan. 10 He pays Ratan & Co., by cheque : 3,300 and is allowed discount : 200.

Jan. 12 Tripathi & Co., pay into his Bank AIc: 4,750.

Jan. 15 He receives cheque for : 4,500 from Warsi and allows him discount : 350.

Jan. 20 He receives cash : 750 and cheque : 1,000 for Cash Sales.

Jan. 25 He pays into Bank : 10,000.

Jan. 27 He pays John & Co. : 3,750 in cash and is allowed discount : 350.

Jan. 30 He pays sundry expenses in cash : 500.

Jan. 31 He pays office rent by cheque : 2,000.

Jan. 31 He pays staff salaries by cheque : 3,000.

Jan. 31 He draws a cheque for personal use : 2,500.

Jan. 31 He pays Jagpal by cheque for commission : 3,000.

Answer 1

Rectification Journal Entries

$\begin{array}{ccccc}\text{S.No.}& \text{Particulars}& \text{L.F}& \text{Amount}& \text{Amount}\\ & & & \text{Dr.(Rs)}& \text{Cr.(Rs)}\\ \left(i\right)& \text{Commission received A/c}\text{Dr.}& & 1,000& \\ & \text{To Rent Recived A/c}& & & 1,000\\ & \text{(Rent received wrongly entered as commission}& & & \\ & \underset{–}{\text{received, now rectified)}}& & & \\ \left(ii\right)& \text{Rent A/c}\text{Dr.}& & 2,500& \\ & \text{To Interest A/c}& & & 2,500\\ & \text{(Rent paid, wrongly debited to Interest Account,}& & & \\ & \underset{–}{\text{now rectified)}}& & & \\ \left(iii\right)& \text{Commission received A/c}\text{Dr.}& & 8,000& \\ & \text{To Interest Received A/c}& & & 8,000\\ & \text{(Interest received credited wrongly to}& & & \\ & \underset{–}{\text{Commission Account, now rectified)}}& & & \\ \left(iv\right)& \text{Drawings A/c}\text{Dr.}& & 35,000& \\ & \text{To Miscellaneous Expenses A/c}& & & 35,000\\ & \text{(purchase of a motor cycle for proprietor}& & & \\ & \text{Charged to Miscellaneous Expenses Account,}& & & \\ & \underset{–}{\text{now rectified)}}& & & \\ \left(v\right)& \text{Buildings A/c}\text{Dr.}& & 27,500& \\ & \text{To Repairs A/c}& & & 27,500\\ & \text{(Expansion of building wrongly debited to}& & & \\ & \underset{–}{\text{Repairs Acount, now rectified}}& & & \\ \left(vi\right)& \text{worker's compensation A/c}\text{Dr.}& & 5,000& \\ & \text{To Wages A/c}& & & 5,000\\ & \text{(The worker's compensation clain debited to}& & & \\ & \text{Wages Account, now rectified)}& & & \end{array}$

(b)(i) The value of responsibility is missing.

(ii)Following rectification entry should be passed.

$\begin{array}{ccccc}\text{Date}& \text{Particulars}& \text{L.F}& \text{Amount}& \text{Amount}\\ & & & \text{Dr.(Rs)}& \text{Cr.(Rs)}\\ & \text{Sales Returns A/c}\text{Dr}& & 10,000& \\ & \text{To Mr. Keshwari}& & & 10,000\\ & \text{(Being goods returened by Mr. Keshwari.}& & & \\ & \text{now recorded)}& & & \end{array}$

Or

Cash Book

$\begin{array}{cccccccccc}\text{Date}& \text{Particulars}& \text{L.F}& \text{Cash}& \text{Bank}& \text{Date}& \text{Particulars}& \text{L.F.}& \text{Cash}& \text{Bank}\\ 2012& & & \left(Rs\right)& Cr.\left(Rs\right)& & & \left(Rs\right)& \left(Rs\right)& \\ \text{Jan 1}& \text{To Balance b/d}& & 2,00,000& & \text{Jan 3}& \text{By Bank A/c}& C& 1,80,000& \\ \text{Jan 3}& \text{To Cash A/c}& C& & 1,80,000& \text{Jan 3}& \text{By Bank A/c}& C& 6,000& \\ \text{Jan 4}& \text{To Kiri \& Co.}& & 6,000& & \text{Jan 10}& \text{By Ratan \& Co.}& & & 3,300\\ \text{Jan 7}& \text{To Cash A/c}& C& & 6,000& \text{Jan 25}& \text{By Bank A/c}& C& 10,000& \\ \text{Jan 12}& \text{To Tripathi \& Co.}& & & 4,750& \text{Jan 27}& \text{By Jonh \& Co.}& & 3,750& \\ \text{Jan 12}& \text{To Warshi}& & 4,500& & \text{Jan 30}& \text{By Sundry Exp.}& & 500& \\ \text{Jan 20}& \text{To Sales A/c}& & 1,750& & \text{Jan 31}& \text{By Office rent}& & & 2,000\\ \text{Jan 25}& \text{To Cash A/c}& C& & 10,000& \text{Jan 31}& \text{By Staff Salaries}& & & 3,000\\ & & & & & \text{Jan 31}& \text{By Drawings A/c}& & & 2,500\\ & & & & & \text{Jan 31}& \text{By Commission A/c}& & & 3,000\\ & & & & & \text{Jan 31}& \text{By balance c/d}& & 12,000& 1,86,950\\ & & & \underset{–}{\overline{2,12,250}}& \underset{–}{\overline{2,00,750}}& & & & \underset{–}{\overline{2,12,250}}& \underset{–}{\overline{2,12,250}}\\ \text{Feb 1}& \text{To balance b/d}& & 12,000& 1,86,950& & & & & \end{array}$