Question

Trial balance of Madan did not agree and he put the difference to suspense account. He discovered the following errors:

(a)	Sales return book overcast by Rs 800.
(b)	Purchases return to Sahu Rs 2,000 were not posted.
(c)	Goods purchased on credit from Narula Rs 4,000 though taken into stock, but no entry was passed in the books.
(d)	Installation charges on new machinery purchased Rs 500 were debited to sundry expenses account as Rs 50.
(e)	Rent paid for residential accommodation of madam (the proprietor) Rs 1,400 was debited to Rent account as Rs 1,000.

Rectify the errors and prepare suspense account to ascertain the difference in trial balance.

Answer 1

Journal
S. No.	Particulars						L.F.	Debit Amount Rs	Credit Amount Rs
(a)	Suspense A/c			Dr.				800
			To Sales Return A/c						800
	(Sales Return Book overcast by Rs 800, now rectified)
(b)	Sahu					Dr.		2,000
			To Purchases Return A/c						2,000
	(Goods returned to Sahu, were not posted, now rectified)
(c)	Purchases A/c			Dr.				4,000
			To Narula						4,000
	(Goods purchased from Narula were not posted, now rectified)
(d)	Machinery A/c				Dr.			500
			To Sundry Expense A/c						50
			To Suspense A/c						450
	(Installation charges on machinery Rs 500 wrongly debited to Sundry Expenses Account as Rs 50, now rectified)
(e)	Drawings A/c			Dr.				1,400
			To Rent A/c						1,000
			To Suspense A/c						400
	(Rent paid for residential accommodation of proprietor as 1,400, was posted to Rent Account as Rs 1,000, now rectified)

Suspense Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(a)	Sales Return		800	(d)	Machinery		450
	Balance c/d		50	(e)	Drawings		400
			850				850

Note: As per the solution Suspense Account shows a credit balance of Rs 50. However, as per the answer given in the book, it is a credit balance of Rs 2050. In order to match answer with the book item (b) is taken as, ‘Purchases return to Sahu Rs 2,000 were not posted to Sahu’s Account.’ Thus, the rectifying entry for this error will be as:

Sahu’s A/c		Dr.		2,000
	To Suspense A/c				2,000