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Answer Posted / srikantpatnaik
Rectification of error : It means the original entry is
wrongly accounted and based on the facts of the transactions
you decide to correct it, so you pass another entry so that
you rectify the error made in the original entry.
ex- you have paid rent and booked the following entry
rent outstanding a/c ..Dr Rs.10,000
To cash a/c Rs.10,000
correction entry.
Rent Account Dr....Rs.10,000
To Rent Outstanding Rs.10,000
the result would be your rent outstanding a/c would become
zero in the ledger(which is basically wrongly used) and
correct account Rent (expense) would appear in the Trial
Balance.
The correction entry to set right the earlier mistake is
called rectification of errors.
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Trial balance as on 31st March, 2014 Particulars Debit Pula Particulars Credit Pula Wages 14 100 Dividends received 4 300 Salaries 13 000 Bank overdraft 41 000 Opening Stock 40 000 Returns 1 000 Machinery 49 000 Creditors 14 200 Investments 30 700 Sales 258 500 Drawings 23 000 Capital 30 000 Purchases 130 000 Returns 2 000 Debtors 18 000 Advertising 13 400 Interest 4 800 Cash 11 000 349 000 ======= 349 000 ======== Additional information: 1. Closing stock is valued at P53 000. 2. Wages include P350 being advance against wages. 3. Wages include P1 000 paid for erection of machinery. 4. A purchase of stationery for P430 has been inadvertently included in the Purchases account. 5. A sale of investments with a book value of P2 600 for P2 500 has been included in the Sales Account. 6. Salaries include P150 per month paid to the proprietor’s domestic servant. 7. Machinery is to be depreciated by 10 per cent. Required: a. The revenue statement (Trading and Profit and Loss Account) for the year ended 31st March 2014 and b. Statement of financial position (Balance Sheet) as on 31st March, 2014.
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