Before preparation of the trial balance, the following errors were found in the books of Saraswat & Sons. Give the necessary entries to correct them. (i) Furniture purchased for of... Before preparation of the trial balance, the following errors were found in the books of Saraswat & Sons. Give the necessary entries to correct them. (i) Furniture purchased for office use amounting to ` 20,000 has been entered in the purchase day book.
Understand the Problem
The question is asking for the necessary journal entries to correct an error where furniture purchases were incorrectly recorded in the purchase day book instead of being classified under the appropriate account. To solve this, we will credit the purchases account and debit the furniture account accordingly.
Answer
Debit Furniture Account and credit Purchase Account by ₹20,000.
To correct the error, debit the Furniture Account by ₹20,000 and credit the Purchase Account by ₹20,000.
Answer for screen readers
To correct the error, debit the Furniture Account by ₹20,000 and credit the Purchase Account by ₹20,000.
More Information
The error involves an incorrect entry of an asset purchase in the purchase day book instead of the assets account. This affects the accuracy of expense and asset tracking.
Tips
A common mistake is forgetting to distinguish between capital and revenue expenditure. Always ensure purchases of fixed assets do not go under regular purchase accounts.
Sources
- Rectify the following errors - BYJU'S - byjus.com
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