Question No: 30

Solution:

(i) Rectification of the purchase of a chair from Modern Traders:

Purchase book is understated by Rs. 180 (530 - 350). So, we need to debit the Purchase account and credit the Suspense account by Rs. 180.

Journal Entry:

Debit: Purchase Account      Rs. 180

Credit: Suspense Account     Rs. 180

(ii) Rectification of the sale to A. Mohan wrongly entered in the purchase day book:

Purchase day book is overstated by Rs. 400. So, we need to debit the Suspense account and credit the Sales account by Rs. 400.

Journal Entry:

Debit: Suspense Account      Rs. 400

Credit: Sales Account        Rs. 400

(iii) Rectification of the overcasting in the returns outward book:

Returns outward book is understated by Rs. 500. So, we need to debit the Returns Outward account and credit the Suspense account by Rs. 500.

 

Journal Entry:

Debit: Returns Outward Account     Rs. 500

Credit: Suspense Account           Rs. 500

 

(iv) Rectification of the incorrect entry for goods returned by K. Mani:

Return Outward book is overstated by Rs. 750. So, we need to debit the Suspense account and credit the Return Outward account by Rs. 750.

 

Journal Entry:

Debit: Suspense Account           Rs. 750

Credit: Returns Outward Account   Rs. 750

(v) Rectification of the undercast in the total of the Purchase Day Book:

Purchase Day Book is understated by Rs. 1,000. So, we need to debit the Suspense account and credit the Purchase Day Book account by Rs. 1,000.

 

Journal Entry:

Debit: Suspense Account      Rs. 1,000

Credit: Purchase Day Book    Rs. 1,000

 

(vi) Rectification of the wrong entry for Motor repairs:

Motor Repairs expenditure is understated by Rs. 760. So, we need to debit the Motor Repairs account and credit the Motor Vans account by Rs. 760.

 

Journal Entry:

Debit: Motor Repairs Account    Rs. 760

Credit: Motor Vans Account      Rs. 760

 

(vii) Completion of the double entry for the cheque received from N. Balu:

A cheque received from N. Balu for Rs. 390 was debited in the cash book, but the double entry was not completed. So, we need to credit the Cash account and debit the Suspense account by Rs. 390.

Journal Entry:

Debit: Suspense Account      Rs. 390

Credit: Cash Account         Rs. 390




As we can see, the total debits and credits in the Suspense Account are now equal. The balance in the Suspense Account, Rs. 660, represents the amount that was initially entered in the suspense account when the difference in the trial balance of Rs. 2,610 was identified.

To eliminate the suspense account, we can make one final journal entry:

Journal Entry:

Debit: Suspense Account    Rs. 660

Credit: Profit & Loss A/c  Rs. 660

With this entry, the Suspense Account will be reduced to zero, and the profit and loss account will be adjusted by the same amount. The books should now be correctly balanced, and the total of the Suspense Account will be Rs. 3,000 (initial balance of Rs. 2,610 + additional Rs. 660).