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Illustrations · Illustration 7

Q.Trial balance of Kailash did not agree. He put the difference to suspense account. The following errors were discovered:

(i) Goods withdrawn by Kailash for personal use ₹500 were not recorded in the books.
(ii) Discount allowed to Ramesh ₹60 on receiving ₹2,040 from him was not recorded in the books.
(iii) Discount received from Rohan ₹50 on paying ₹3,250 to him was not posted at all.
(iv) ₹700 received from Khalil, a debtor, whose account had earlier been written-off as bad, were credited to his personal account.
(v) Cash received from Govil, a debtor, ₹5,000 was posted to his account as ₹500.
(vi) Goods returned to Mahesh ₹700 were posted to his account as ₹70.
(vii) Bill receivable from Narayan ₹1,000 was dishonoured and wrongly debited to allowances account as ₹10,000. Give journal entries to rectify the above errors and prepare suspense account to ascertain the amount of difference in trial balance.
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(i)-(iv) are two-sided and corrected directly; (v), (vi), (vii) are one-sided and go through Suspense. The Suspense Account totals ₹13,500, giving an original difference of ₹12,870 excess debit.

Solution — rectifying journal entries

No.ParticularsL.F.Debit (₹)Credit (₹)
(i)Drawings A/c Dr.500
  To Purchases A/c500
(Goods withdrawn for personal use not recorded, now rectified)
(ii)Discount Allowed A/c Dr.60
  To Ramesh's A/c60
(Discount allowed to Ramesh not recorded, now rectified)
(iii)Rohan's A/c Dr.50
  To Discount Received A/c50
(Discount received from Rohan not posted, now corrected)
(iv)Khalil's A/c Dr.700
  To Bad Debts Recovered A/c700
(Bad debts recovered wrongly credited to debtor's personal account, now corrected)
(v)Suspense A/c Dr.4,500
  To Govil's A/c4,500
(Cash from Govil ₹5,000 posted to his account as ₹500; short credit ₹4,500)
(vi)Mahesh's A/c Dr.630
  To Suspense A/c630
(Goods returned to Mahesh ₹700 posted as ₹70; short debit ₹630)
(vii)Narayan's A/c Dr.1,000
Suspense A/c Dr.9,000

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