RECTIFICATION OF ERRORS 193

tustration 5 2)
The difference of "Trial Balance of a trader 7 459 has been transferred to Suspense Account. Later on
Gllowing errors were discovered. Pass the necessary rectifying entries, open Suspense Account and show
he effect of rectifying entries on profit and loss account:
he
) Total of Sales Returns Book was undercast by 50. (ii) Instead of crediting7 512 in Mohan's account,
1 5 were debited in his account. (ii) A machinery of7 2,000 was purchased, but was recorded in Purchases
2ok. 172
sale of
was recorded in as z 217.
sales account (v)Adiscount of7 41
to
allowed
was
(iv) A
Ramesh: but in his account only 7 14 were recorded. (vi) Depreciation of ? 100 was charged on a machinery
it was not recorded in depreciation account. (vii) A credit sale of 7 50 has been credited to sales account
but
and also to the sundry debtors account.
Solution 5 Journal Entries
LF
Sales Returns A/c Dr. 50
)
To Suspense A/c 50
(Being undercasting of sales returns, now rectified)
(1i) Suspense A/c Dr. 727
To Mohan 727
(Being rectifying entry made for wrong posting)
Machinery Ale Dr. 2,000
iii)
To Purchases A/c 2,000
(Being wrong record of purchases, now corrected)
45
Sales A/c Dr.
(iv) 45
To Suspense A/c
(Being wrong posting to Sales Account, now rectified)

(v) Suspense A/c Dr. 27

27
To Ramesh
corrected)
(Being wrong posting to Ramesh account,
now

Dr. 100
(vi) Depreciation A/e
100
To Suspense A/e
to depreciation account, now rectified)
(Being omission of posting
. . Dr. 100
(Vii) Sundry Debtors A/c
100
To Suspense A/c
now rectified)
(Being the sales wrongly credited to customer's account,
2 217- 172 7 45; 41-7 14 =7 27.
7512+7 215 = 727;
and Profit & Loss Account
Supplementary Trading

50 By Purchases A/c 2,000

To Sales Returns A/c
45
To Sales A/c
100
To Depreciation A/c
T Profit transferred to Capital A/c 1,,805
2,000 2,000

increase the profit by 7 1,805.

ectifying entries will Suspense Account

727 By Balance b/d 459

To Mohan 27 By Sales Returns Alc 50
To Ramesh By Sales A/e 45
By Depreciation A/c 100
By Sundry Debtor 100
754 754
llustration 10
1 374, 2016 s
34 aus vaa-è a2lta
R1,35,000 À E KGATA EO

4%aTTas 3AT0 7R0-18463 ufaad faforT

5 qt ae R1TI
F:a aia1, Atsa 5U
On 1st April. 2016 Sri
Ankur
purchased an
It isexpected that machine will remain in use forX-Ray Machine for R 1,35,000.
5 years and then
will be 35,000. A Sinking Fund scrap value
created to replace the machine
by
at 4% per annum. At the end of
the fifth year investment was sold investing
As per Sinking Fund Table at 4% for 7 81,700.
interest on amount equal to T0-18463 should
be invested every year to receive
one rupee after 5
years. Prepare Machinery
a/c, Sinking Fund and Sinking Fund
Investment a/c (Calculation should be
made to the nearest rupee). (TTT f. fa. 2015; feagz fa. fa. 2018)
Solution.
Calculation of Depreciation:
Depreciation = (Value of Machine - Scrap Value) x As per
Sinking Fund Table Value
=
(1,35,000 -35,000) x 0.18463
=
1,00,000 x 0.18463
= 7 18,463

Dr. X-Ray Machinery Account Cr.

Date Particulars J.F. Amount Date Particulars LF.| Amount
2016-17 2016-17
April, 1 To Bank alc 1,35,000 Mar., 31| By Balance c/d 1,35,000
1,35,000 1,35,000
2017-18 2017-18
April, 1 To Balance b/d 1,35,000 Mar., 31 By Balance cld 1,35,000
1,35,000 1,35,000
2018-19 2018-19
April, 1 To Balance b/d 1,35,000 Mar., 31|By Balance c/d 1,35,000

1,35,000 1,35,000
2019-20
2019-20
April, 1 To Balance b/d 1,35,000 Mar., 31 By Balance c/d 1,35,000

1,35,000 1,35,000

2020-21 2020-21
1,35,000 Ma.., 31 By Bank alc 35,000
April, 1 To Balance b/d
1,00,000
By Sinking Fund alc
1,35,000 1,35,000
 148
T . (uara qt)
Sinking Fund Account
Dr. Cr.
Date Particulars J.FAmount Date Particulars y.F Amnount
2016-17
2016-17
Mach, 3 To Balance c/d 18,463 Mar., 31 By Depreciation
ale 18,463
18,463 18,463
2017-18 2017-18

Mar., 31 To Balance c/d 37,665April 1 |By Balance b/d 18,463

Mar., 31 By Interest a/c
on Sinking
Fund Invest. a/c 739
Mar., 31 By Depreciation
a/c 18,463
37,665 37,665
2018-19 2018-19
Mar., 31 To Balance c/d 57,635 April 1 By Balance b/d 37,665
Mar 31 By Interest on
Sinking 1,507
Fund Invest. A/c
Dec., 31 By Depreciation
alc 18,463
57,635 57,635
2019-20 2019-20
Mar., 31 To Balance c/d 78,403 April 1 by Balance b/d 57,635
Mar. 31 By Interest on
Sinking Fund
Invest. alc 2,305
Dec. 31 By Depreciation a/e 18,463
78,403 2016 78,403
2020-21 To X-Ray 2020-21
Mar., 31 Machinery a/c 1,00,000 | April 31| By Balance b/c
Mar., 31 |To P & L alc 78,403
3,349 Mar., 31 By Interest on
Sinking Fund
Invest. a/c 3,136
Mar., 31 By Depreciation a/c| 18,463
Mar., 31 By Sinking Fund
Investment a/c 3,347
1,03,349 1,03,349

Dr.
Sinking Fund Investment Account Cr.
Date Particulars J.F| Amount Date Particulars J.F Amount
2016-177
Mar., 31 To Bank alc 2016-17
18,463 Mar., 31 By Balance dd 18,463

18,463 18,463
2017-18
April, 1 To Balance b/d 2017-18
Mar., 31 To Bank a/e 18,463 Mar., 31| By Balance dd 37,655

19,202
37,665 37,665
 farit daTBa| 149 93

2018-19 2018-19
April, 1 To Balance b/d 37,665 Mar., 31 By Balance cd 57,635 O

19,970 ov
Mar., 31| To Bank a/c
57,635 57,635 n
sE
2019-20 2019-20
By Balance cd 78,403 er
April, 1 | To Balance b/d 57,635 Mar., 31 u
Mar., 31|To Bank alc 20,768
78,403 78,403

2020-21 2020-21
78,403 Mar., 31 By Bank a/c 81,750
April, 1 To Balance b/d
Mar., 31 To Sinking Fund a/c 3,347
81,700 81,750

Illustration 11.
 farfta g a 33aT Å (at the end of second year)

adty at s 3ia Å (at the end of third year) 5,0

6,6

Interest on cash price is 10% per annum, which is included in tho.

instalments. Machinery is depreciated at 10% per annum on the original cno
bove
nal cost.
Calculate the cash price and make necessary accounts in the books of Hi
facage fa fa 2014; . zfA9raz yar fA A 2017
Aire
Purchaser.
Solution: Analytical Table

Instalment + Cash Price Calculation Interest Instalment- Cash Price

ofInsterest Interest

6,600x10
Last Instalemnt 6,600 600 6,600 600
110 6,000

2nd Instalment 11,000x10

. 6,000 + 5,000 =7 11,00o 110 1,000 5,000 1,000 4,000

13,200x10
1st Instalment 3,200 +
4,000 +6,000 110
1,200 3,200-1,200 2,000

713,200 Payment on
Delivery 5,200
2,800 17,200

In the Books of Hire-Purchaser

Dr. Machinery Account Cr.
Date Particulars J.F. Amount Date Particulars J.EAmount

1Yr I Yr.
Jan.1 To Cash a/c 5,200 Dec.31 By Depreciation a/c 1,720
Dec. 31 To Hire Vendor's a/c 2,000 Dec. 31 By Balance dd 5,480

7,200 7,200

II Yr. II Yr
Jan.1 To Balance h/d 5,480 Dec. 31 By Depreciation a/c 1,720

Dec. 31 To Hire Vendor's a/c 4,000 Dec. 31 By Balance c/d 7,760

9,480
9,480
III Yr. III Yr.
1,720
To Balance b/d 7,760 Dec. 31 By Depreciation a/c
Jan.1 12,040
Dec. 31 To Hire Vendor's alc 6,000 Dec. 31 By Balance c/d
13,760
13,760
 Depreciation Account Cr.
Dr
I Yr.
a/c 1,720 Dec.
Yr To
Machinery 31 By P & a/c 1,720
31
Dec.
II Yr.
II Yr.
Machinery a/c 1,720 Dec. 31 By P & L alc
31
To 1,720
Dec.
III Yr.
IIYr To Machinery alc 1,720 |Dec. 31
Dec. 31 To. By P & L a/c 1,720

Hire Vendor's Account

I Yr.
Yr Cash a/c 3,200 Dec., 31 By Machinery a/c
Dec.
31 To 2,000
Dec., 31 | By Interest alc 1,200

3,200 3,200

I Yr. II Yr.
To Cash a/c 5,000 Dec. 31 By Machinery a/c 4,000
Dec. 31
Dec. 31 By Interest a/c 1,000
5,000 5,000
III Yr. III Yr.
Cash a/c 6,600 Dec. 31 By Machinery a/c 6,000
Dec. 31 To 600
Dec. 31 |By Interest a/c
6,600 6,600

Interest Account

I Yr. I Yr.
Dec. 31 By P & L a/c 1,200
Dec. To Hire Vendor's a/c| 1,200
I Yr. II Yr.
L a/c 1,000
Dec. 31 To Hire Vendor's a/Jc 1,000 Dec. 31 By P &
TIII Yr. III Yr.
P & L ale 600
Dec. 31 600 Dec.31 By
To Hire Vendor's a/c

lustratinn i
 P,Q and R entered into partnership on April 1,2019,
sharing profits and losses in the
4:3:2, respectively and with capitals of 30,000; F 20,000 proportion of
and 10,000. Their assets and liabilities cn
April 1, 2019, the date on which they decided to wind up their affairs, were as follows-Office
1,000; Sundry Debtors 7 28,000; Bills receivable 7 5,000; Stock 7 fixture
45,000; Sundry
creditors 7 30.000: and
Bills payable 7 4,000.
P agreed to take over the stock at a discount of 10% and
the book debts at a discount of 20% and pay-off the creditors. Rpay-off
bill payable. Q agreed to take over
took over the bills
and office fixture at a depreciation of 10%, 5% interest is to be credited to each receivables
at 7 4.5

Prepare Realisation Account and Capital Accounts of the partners and an accountpartner
on
his capia
of profits or losses in the business. showing adjustmen
Solution 4 Profit and Loss Account
for the year ending on 31st March, 2019)
To Balance b/d (Loss)
To Interest on Capital 15,000*| By Partners' Capital A/cs:
P 8,000
P 1,500 6,000
1,000 4,000 18,000
500 3,000
18,000
18,000
Balance Sheet (as at 1st April, 2019)

Sundry Creditors 30,000 Bills Receivable

Bills Payable 280

4,000 Sundry Debtors

45,
Capitale: Stock-in-Trade
P
30,000 Office Fixtures
Q 20,000 Profit and Loss
R
10,000 60,000 (Balancing figure is assumed as Loss) 94.N

94,000
 Realisation Account

Receivable A/c 5,000 By Sundry Creditors' A/c 30,000

To Bill
Debtors' A/c 4,000
To Sundry 28,000 By Bills Payable A/c
To Stock-in-Trade A/Vc 45,000 By Q's Capital A/c 22,400
To Office Fixtures A/c 1,000 By P's Capital A/c 40,500
To Q's Capital A/c (Creditors) 30,000 By R's Capital A/c 5,777
To P's Capital A/c (B/P) 4,000 By Capital A/cs:
P 4,588
Q 3,441
R 2,294 10,323
1,13,000
1,13,000

174,877 +900 = 5,777.

Partners' Capital Accounts
P Q R
P Q R

30,000 20,000 10,000

A/c (Loss) 8,000 6,000 4,000 By Balance b/d
To P.&L. 1,500 1,000 500
40,500 22,400 5,777 By Interest on Capital A/c
To Realisation A/c
4,000 30,000
To Realisation A/c 4,588 3,441 2,294 By Realisation A/e
By Cash A/c 17,588 1,571
19,159
To Cash Ae
53,088 51,000 12,071 53,088 51,000 12,071

TII