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 ACCOUNTS 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 and loss Adj. a/c Dr. 1,500 To Discount a/c 1,500

Answer 1

The correct option is A Suspense a/c Dr. 1,500

To Profit & Loss Adj. a/c 1,500

Profit and Loss Adj, a/c is an account prepared to rectify the errors after the preparation of final accounts. The credit balance of discount a/c was not recorded in the books earlier.

Therefore, Profit and Loss Adj. a/c is credited to show the discount a/c, and to complete the double entry, suspense a/c is debited.

Hence, A is the correct option.