Rectification of Accounting Errors in Journal Proper  

 

Concept of Journal Proper

Journal proper refer to the special types of journals which occur occasionally.

These are also known by subsidiary journals.

There are certain types of transactions which are not recorded in other subsidiary books but for the systematic recording.

Systematic recording of all such transactions are made under journal proper by following rules of double entry system of book-keeping.

Some examples of such transactions can be given as below:

Opening entries

Closing entries

Transfer entries

Adjustment entries (outstanding, prepaid, accrued, advance income)

Rectification entries

No special journal (free sample, loss by fire etc)

Rare transaction

  

Rectification of Accounting Errors

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

 

When errors are discovered in the books of account, they are corrected by journal entries in concerned accounts.

Crossing and erasing of errors are not practiced because they reduce the legal values of accounts.

It also makes them dirty.

The correction of errors is journalized in systematic manner by passing a special entry in the journal proper.

It is known as rectification of errors.

Before preparing the rectification entry, one should identify the errors of account.

The following steps are to be followed to identify the errors:

Steps to be followed in locating the errors

1	Check the debit totals and credit totals of trial balance and ascertain the difference between them if any.
2	Find out that different amount. Otherwise,
3	Divide the difference amount by 2 in order to find out the balance of same amount in the trial balance. Also check whether any amounts have been posted twice in the trial balance.
4	Multiply the difference amount by 2 in order to find out the balance of same amount in the trial balance.
5	If the second and third step fails to locate the errors, a transposition error may have occurred. Such as Rs 7,200 is recorded instead of Rs 2,700. Divide the difference by 9. If the difference figure is divisible by 9 without remainder, it is a transposition error.
6	Check the balances of all ledger accounts including are included in the trial balance or not.
7	Check whether the opening balances have been carried forward correctly.
8	Compare the current year’s trial balance with that of previous year in case of large difference between debit and credit totals.
9	If above techniques fail to identify the errors, recheck the totals of subsidiary books, posting from journal and subsidiary books, balances extracted from ledger accounts, casting of ledger balances and recheck whole prime entry as required.

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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,

  

PROBLEM: 9

The following data find out by Max Traders after preparing trial balance:

(a) Goods sold to Mr Pawan Rs 5,000 was wrongly debited to purchase account.

(b) Goods purchase from GK Emporium Rs 12,000 was omitted to record.

(c) Goods returned by DK Traders Rs 525 was posted to KD Traders.

(d) Goods sold to SR Enterprises of Rs 2,575 were recorded as Rs 5,725.

(e) Rent paid Rs 5,200 was posted as Rs 2,500.

Required: Rectification of error

 [Answer: (a) Debited Pawan by 10,000; (b) Purchase debited by 12,000;

(c) KD Traders debited by 525; (d) Sales debited by 3,150; (e) Rent debited by 2,700

 

SOLUTION:

Given and working note:

(a) Goods sold to Mr Pawan Rs 5,000 was wrongly debited to purchase account.

Step 1,					Step 2,
Correct entry				÷
Pawan           To Sales	Dr	5,000	5,000		Purchase           To Pawan	Dr	5,000	5,000

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
Pawan           To Sales	Dr	5,000	5,000		Pawan           To Purchase	Dr	5,000	5,000

 

(b) Goods purchase from GK Emporium Rs 12,000 was omitted to record.

Step 1,					Step 2,
Correct entry				÷
Purchase           To GK Emporium	Dr	12,000	12,000		No entry

 

(c) Goods returned by DK Traders Rs 525 were posted to KD Traders.

Step 1,					Step 2,
Correct entry				÷
Sales return           To DK Traders	Dr	525	525		Sales return           To KD Traders	Dr	525	525

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
Sales return           To DK traders	Dr	525	525		KD Traders           To Sales return	Dr	525	525

 

(d) Goods sold to SR Enterprises of Rs 2,575 were recorded as Rs 5,725.

Step 1,					Step 2,
Correct entry				÷
SR Enterprises           To Sales	Dr	2,575	2,575		SR Enterprises           To Sales	Dr	5,725	5,725

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
SR Enterprises           To Sales	Dr	2,575	2,575		Sales           To SR Enterprises	Dr	5,725	5,725

 

(e) Rent paid Rs 5,200 was posted as Rs 2,500.

Step 1,					Step 2,
Correct entry				÷
Rent           To Cash	Dr	5,200	5,200		Rent           To Cash	Dr	2,500	2,500

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
Rent           To Cash	Dr	5,200	5,200		Cash           To Rent	Dr	2,500	2,500

 

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ACCOUNTING EQUATION http://tiny.cc/c89jkz

BASIC JOURNAL ENTRIES IN NEPALI http://tiny.cc/uaakkz

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Rectified Journal Entry

Date	Particulars		LF	Amount Dr	Amount Cr
(a)	Pawan’s account           To Sales account           To Purchase account (Being- goods sold to Pawan wrongly recorded as Goods purchased from him, now rectified)	Dr		10,000	5,000 5,000
(b)	Purchase account           To GK Emporium account  (Being- goods purchase from him omitted to record, now recorded)	Dr		12,000	12,000
(c)	KD Traders account           To DK Traders account (Being- sales returned by DK Traders was wrongly posted to KD Traders, now rectified)	Dr		525	525
(d)	Sales account           To SR Enterprises (Being- goods sold to him over recorded by (5,725 – 2,575)= Rs 3,150, now rectified)	Dr		3,150	3,150
(e)	Rent account           To Suspense account (Being- rent paid under recorded by (5,200 – 2,500) Rs 2,700, now rectified)	Dr		2,700	2,700

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PROBLEMS  AND  ANSWERS

 

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

Basic Problem: 9

Following errors were detected after preparation of trial balance:

(a) Goods purchased from Gandaki Store worth Rs 20,000 recorded in sales book.

(b) Commission paid to Santosh was credited as commission received Rs 5,000.

(c) Goods sold to Hari worth Rs 560 was posted as Rs 650 in his account.

(e) Purchase of computer print paper of Rs 3,000 has been recorded through the purchase account

(f) A credit sale of Rs 13,000 to Ram omitted to record.

(g) Credit purchased of goods valued Rs 1,000 were returned to creditors was recorded as sales return.

Required: Entries for rectification

[Answer: Credited GS Rs 40,000; Credited suspense Rs 10,000; Credited Hari Rs 90;

Debited Stationery Rs 3,000; Debited Ram Rs 13,000;

Credited creditors and debtor Rs 1,000 each]

 

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