Home » Accounting Explanation » Rectification of Errors - Errors not affecting Trial Balance agreement


Rectifying entry for errors of original entry

Error: A cash sales of goods amounting to $50 was taken as $30 in the books of accounts

The original value of sales was $50 but we have entered $30 in sales and cash account. We, therefore, add another $20 in the accounts to rectify this error. This can be done by debiting cash with $20 and crediting sales account with $20 as well.

The wrong entry that we have made by mistake

  DESCRIPTION DEBIT CREDIT



   Cash   $30



                    Sales   $30






The right entry that we should have passed

  DESCRIPTION DEBIT CREDIT



   Cash   $50



                    Sales   $50






The rectifying entry that will correct the error

  DESCRIPTION DEBIT CREDIT



   Cash   $20



                    Sales   $20





Because we debited $30 in the cash account and credited $30 in sales account instead of entering $50 in each of these accounts. We have now added $20 more to cash account and sales account respectively to correct the error



Rectifying entry for errors of transition

Error: A cash sales of goods amounting to $85was taken as $58 in the books of accounts

The error and its treatment is same as "error of original entry" the only difference is error of transposition occurs because of interchanging the digits in the amount or figure. In this case, we have interchanged the position of digit 8 with the position 5 and came up with the figure of 58 which resulted in the deficiency of $27 in sales and cash account balance. We, therefore, need to correct this error by adding $27 additional to these accounts.

The wrong entry that we have made by mistake

  DESCRIPTION DEBIT CREDIT



   Cash   $58



                    Sales   $58






The right entry that we should have passed

  DESCRIPTION DEBIT CREDIT



   Cash   $85



                    Sales   $85






The rectifying entry that will correct the error

  DESCRIPTION DEBIT CREDIT



   Cash   $27



                    Sales   $27





Because there was a deficiency of $27 in cash and sales account balance,  we have debited cash account by $27 and credited sales account by $27 to rectify the error



Rectifying entry for error of complete reversal of entries

Error: A cash purchases of goods for $300 was incorrectly posted in the debit side of cash account and was credited to purchase account.

This might be hard to understand. Since we have debited the credit item and credited the debit item, we first have to cancel the effect of wrong entry with original amount ($300) and then we would make the actual entry in the books of accounts which means the rectifying entry would be made with double the amount of original entry (with $600 or 2x$300)

The wrong entry that we have made by mistake

  DESCRIPTION DEBIT CREDIT



   Cash   $300



                    Purchases   $300






The right entry that we should have passed

  DESCRIPTION DEBIT CREDIT



   Purchases   $300



                    Cash   $300






The rectifying entry that will correct the error

  DESCRIPTION DEBIT CREDIT



   Purchases   $600



                    Cash   $600




We have credited $600 to purchases account which is double the original amount ($300) because $300 is needed to correct the error and another $300 is required to pass the original entry in the purchase account. This will give you the net effect of $300 Debit in the purchases account. Same goes for the cash account.

The effect of wrong entry on ledger accounts





DEBIT
Purchases Account



CREDIT
DATE
DESCRIPTION
AMOUNT
DATE
DESCRIPTION
AMOUNT




Mar. 31 Cash



$300











DEBIT
Cash Account



CREDIT
DATE
DESCRIPTION
AMOUNT
DATE
DESCRIPTION
AMOUNT
Mar. 31Purchases

$300















We have passed a reverse entry with original amount ($300)




DEBIT
Purchases Account



CREDIT
DATE
DESCRIPTION
AMOUNT
DATE
DESCRIPTION
AMOUNT
Mar. 31Cash
(Rectifying entry with original amount, error corrected but actual entry can't be entered because the 
account balance is ZERO)
$300

Mar. 31 Cash


$300











DEBIT
Cash Account



CREDIT
DATE
DESCRIPTION
AMOUNT
DATE
DESCRIPTION
AMOUNT
Mar. 31Purchases

$300

Mar. 31 Purchases
(Rectifying entry with original amount, error corrected but actual entry can't be entered because  the 
account balance is ZERO)
$300







Entry has successfully corrected the error but still there is no actual "purchase of good" entry in the accounts because debit $300 and credit $300 equal to Zero balances of cash and purchase accounts. Therefore, we need make a rectifying entry with double the original amount of entry ($600)

So, we would pass a reverse or rectifying entry with double the original amount (double amount=$600) which gives the balance of $300 of purchase account and $300 of cash account ($600-$300=$300 Balance)




DEBIT
Purchases Account



CREDIT
DATE
DESCRIPTION
AMOUNT
DATE
DESCRIPTION
AMOUNT
Mar. 31Cash
(Rectifying entry with double amount, error corrected as well as actual entry entered)
$600

Mar. 31 Cash



$300











DEBIT
Cash Account



CREDIT
DATE
DESCRIPTION
AMOUNT
DATE
DESCRIPTION
AMOUNT
Mar. 31Purchases

$300

Mar. 31 Purchases
(Rectifying entry with double amount, error corrected as well as actual entry entered)
$600









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