Accounting Error Asset Sold Recorded As Goods

 

Two sided error after preparing trial balance

When an error affects two sides, it is known two sided errors.

This type of error needs journal entry to rectify.

Such error affects two side, debit and credit.

Double entry system of bookkeeping is applied for this error.

Procedures for two sided errors before preparing trial balance are given below:

Step 1:   write correct entry of the transaction,

Step 2:   write wrong entry of the transaction,

Step 3:   write correct entry as it is,

Step 4:   change wrong entry (debit entry to credit and credit entry to debit),

Step 5:   find out rectified journal entry.

On after preparing trial balance, we should write ‘suspense’ in place of ‘cash’ on final rectified journal entry,

 

 

Assets sold recorded as goods (inventory, merchandise) sold and vice versa

Organization can sell old or used assets.

Asset sold and goods are different entries.

Bookkeeping can record wrong entry like asset sold recorded as goods sold.

This transaction either may be cash or credit.

 

PROBLEM: 11

You are given following extracted information after preparing trial balance:

Equipment sold to BK Traders was passed through the sales book Rs 80,000.

Required: Rectified journal entry

[Answer: Debited sales by Rs 80,000]

SOLUTION:

Given and working note:

Step 1,					Step 2,
Correct entry				÷
BK Traders           To Equipment	Dr	80,000	80,000		BK Traders           To Sales	Dr	80,000	80,000

Again, correct entry just copy and paste but wrong debit entry credited and wrong credit entry debited

Step 3,					Step 4,
Correct entry				x	Wrong entry
BK Traders           To Equipment	Dr	80,000	80,000		Sales           To BK Traders	Dr	80,000	80,000

Next

Rectified Journal Entry

Date	Particulars		LF	Amount Dr	Amount Cr
	Sales account           To Equipment account (Being- equipment sold wrongly recorded as sales account, now rectified)	Dr		80,000	80,000

 

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PROBLEMS  AND  ANSWERS

 

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = 

Basic Problem: 11

Asset sold wrongly recorded as goods sold

Following extracted information is given to you (after preparation trial balance):

(a) Old furniture of Rs 7,125 sold to Nikita credited to sales account.

(b) Sale of old machine in cash Rs 58,250 has been credited to sales account.

(c) Old computer costing Rs 8,500 sold in cash recorded as sales account of Rs 850.

Required: Rectified journal entries

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