Accounting: Rent Received, Bank, Commission, Stock and Drawings Account, Trial Balance and Errors (For CBSE, ICSE, IAS, NET, NRA 2022)

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Rent Received a/C

Dr. Cr.

Table Supporting: Rent_Received_Ac
DateParticularsJ. F.Amount (₹)DateParticularJ. FAmount (₹)
Jan 31Balance c/d1500Jan 31Bank A/c1500
15001500

Bank a/C

Dr. Cr.

Table Supporting: Rent_Received_Ac
DateParticularsJ. F.Amount (₹)DateParticularJ. FAmount

(₹)

Jan 1

Jan 8

Jan 31

Capital A/c

Sales A/c

Rent received A/c

100000

24000

1500

Jan 20

Jan 31

Jan 31

Jan 31

Purchases A/c

Commission A/c

Drawings A/c

Balance c/d

55000

18000

2200

66700

1255000125500

Commission a/C

Dr. Cr.

Table Supporting: Rent_Received_Ac
DateParticularsJ. F.Amount (₹)DateParticularJ. FAmount (₹)
Jan 20Bank A/c1800Jan 31Balance c/d1800
18001800

Stock a/C

Dr. Cr.

Table Supporting: Rent_Received_Ac
DateParticularsJ. F.Amount (₹)DateParticularJ. FAmount (₹)
Jan 31Purchases A/c15000Jan 31Balance c/d15000
1500015000

Drawings a/C

Dr. Cr.

Table Supporting: Rent_Received_Ac
DateParticularsJ. F.Amount (₹)DateParticularJ. FAmount (₹)
Jan 31Bank A/c2000Jan 31Balance c/d2000
20002000

Solution:

Trial Balance of Shan India Ltd. As on 31st January, 2006

Table Supporting: Trial_Balance_of_Shan_India_Ltd_As_on_31st_January_2006
Name of the AccountL. F.Balance (₹)
Dr.Cr.
Capital A/c

Sales A/c

Purchases A/c

Vikram՚s A/c

Pranaya՚s A/c

Commission A/c

Rent received A/c

Drawings A/c

Closing Stock

Cash at Bank

80000

46000

1800

2000

15000

66700

100000

70000

40000

1500

211500211500

Trial Balance and Errors

As we already discussed that Trial Balance just provide arithmetical accuracy. But, sometimes we may not get equal amounts on both sides of the trial balance statement. Reasons behind the mismatch of credit side and debit side –

  • Recording a transaction wrongly in the journal.
  • Recording a transaction wrongly in the leger.
  • Mistake in carrying balance from the ledger account to the Trial Balance.
  • Error in calculating the totals of debit side and credit sides.
  • Omission of certain transactions.

Classification of Errors

All those above-mentioned errors can be calculated into three major kinds.

  • Error of Omission: Sometimes we forget to record transactions either in the journal or in the ledger. The omission is of two types. Under complete omission, we forget to enter the transaction in journal. Under partial omission, we forget to pass the entry from journal to ledger.

Ex: Credit purchase of ₹ 10000 is not recorded in purchases book.

  • Error of Commission: Wrong recording of amounts, wrong totaling of balances etc. come under error of commission. These are of clerical nature and mostly affect the trial balance.

Ex: A pays 4000 to B for purchases. Entry is correct in purchase book but the amount wrongly posted in the ledger, as 400.

  • Error of Principle: Entries in Journals and ledgers are based on certain principles. The errors resulting due to the violation of these principles is called as Errors of principles.

Ex: Purchase of Machinery entered in Purchase Book. It is wrong because machinery not for the resale. So, the entry should not come under purchase book.

Suspense Account

  • We already discussed that there is scope for errors while preparing the Trial Balance. If we found them in the first go, there will be no problem. What if the accounting period is going to end?
  • At that time to close the accounts, we balance the Trial Balance by introducing a special account i.e.. Suspense Account. We record the unbalanced amount under Suspense A/c. We just write Suspense A/c under Name of the ledger column and record the unbalanced account either on debit side or credit side to balance both the sides.
  • Suspense A/c will disappear as soon as the errors are detected and rectified.

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