Question

A purchase of Rs.10,000 has been wrongly posted to the credit of sales account but had been correctly entered in the supplier's account. The trial balance would show:

• A. the credit side to be Rs.10,000 more than debit side
• B. the debit side to be Rs.10,000 more than credit side
• C. the credit side to be Rs.20,000 more than debit side
• D. the debit side to be Rs.20,000 more than credit side

Answer 1

Answer: (C)

the credit side to be Rs.20,000 more than debit side

The entry for goods purchased on credit is :

Purchase A/c Dr 10000

To Creditor's A/c 10000

Here purchases account ledger has to be debited while the creditor's ledger will be credited. But instead of a purchases account, the entry has been posted to the credit side of the sales account. The creditor's account and sales account always have a credit balance. When these balances are transferred to the trial balance, the credit side will be 20000 more than the debit side, this is because the sales account as well as the supplier's account, both show the balance of the transaction of 10000 with no corresponding record on the debit side.