Rs. 6,000 being the cost of purchase of office furniture was entered in the purchases book. If this error located after preparation of final account then which of the following rectification entry is correct?
A
Office Furniture A/c Dr. 6,000 To Profit & Loss Adj. A/c 6,000
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B
Office Furniture A/c Dr. 6,000 To Suspense A/c 6,000
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C
Profit & Loss Adj. A/c Dr. 6,000 To Office Furniture A/c 6,000
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D
Suspense A/c Dr. 6,000 To Office Furniture A/c 6,000
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Solution
The correct option is A Office Furniture A/c Dr. 6,000 To Profit & Loss Adj. A/c 6,000 This error doesn't have any effect on the agreement of the trial balance but it is not correct, so it has to be rectified. The original should be cancelling the entry in purchase account and recording it into furniture account. The entry should be -
Furniture A/c. Dr 6000
To Purchases A/c. 6000
Since the final account has been prepared, all the nominal accounts are replaced with profit and loss adjustment A/c.