Question

Rs$1,500$ being the total of discount column on the credit side of the cash book was not posted in the general ledger. If this error located after preparation of final account then which of the following rectification entry is correct?

• A. Suspense A/c Dr. $1,500$
  To Profit & Loss Adj. A/c $1,500$
• B. Profit & Loss Adj. A/c Dr. $1,500$
  To Suspense A/c $1,500$
• C. Discount A/c Dr. $1,500$
  To Profit & Loss Adj. A/c $1,500$
• D. Profit & Loss Adj. A/c Dr. $1,500$
  To Discount A/c $1,500$

Answer 1

Answer: (A)

Suspense A/c Dr. $1,500$

To Profit & Loss Adj. A/c $1,500$
Total of discount column on the credit side is not posted in the ledger. It is an error of commission and affected the profit & loss account by showing lesser profit.

If the error is located after the preparation of final account, then rectification entry will be passed through profit & loss adjustment account.

Following rectification entry will be passed:

Suspense A/c Dr. 1500

To Profit & Loss Adjustment A./c 1500