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CORRECTION OF ERRORS

(a) ERROR OF OMISSION:

Merchandise purchased was not recorded. The transaction was completely omitted from records.

Step # 1: What was the double entry?
No entry was made.

Step # 2: What should the double entry have been?
The entry for this transaction should have been as Purchases 10,000 debit and Cash 10,000 credit.

Step # 3: Correcting entry:
if an entry is completely omitted from accounting records, the correcting entry is same as the entry should have been recorded. so the correcting entry will be Purchases 10,000 debit and cash 10,000 credit.


(b) ERROR OF COMMISSION:
Salaries was wrongly recorded in wages account.

Step # 1: What was the double entry?
Company made the wrong entry as Wages expense 3,000 debit and cash 3,000 credit. Company should have been recorded salaries expense instead of wages expense.

Step # 2: What should the double entry have been?
The entry should have been recorded as Salaries expense 3,000 debit and cash 3,000 credit.

Step # 3: Correcting entry:
Company made error in salaries and wages.Company wrongly debited wages account. For the rectification of wages, Wages expense should be credited and company should have been debited the salaries expense account but company did not do that so salaries expense account will be debited to correct this error. The entry will be Salaries expense 3,000 debit and Wages expense 3,000 credit.


(c) ERROR OF PRINCIPLE:

Purchase of building was wrongly debited to repair account.

Step # 1: What was the double entry?
Company made the wrong entry by debiting Repairs expense 100,000 and crediting cash 100,000.

Step # 2: What should the double entry have been?
Company should have been debited the building account as they purchased the building. so the entry should have been recorded as Building 100,000 debit and cash 100,000 credit.

Step # 3: Correcting entry:
Company recorded repair expense account as debit wrongly. for rectification it should be credited and building account should have been debited by the company so it will be debited. Correcting entry will be passes as building 100,000 debit and repair expense 100,000 credit.


(d) COMPENSATING ERROR:
There are two different errors made.

Step # 1: What was the double entry?
Rent paid 12,000 has been debited as 14,000 to rent expense account and sales recorded as 2,000 more than actual sales.
so first error recorded as rent expense 14,000 debit and cash 12,000 credit, second error recorded as cash 10,000 debit and sales 12,000 credit. there are two different errors.

Step # 2: What should the double entry have been?
For rent, entry should have been recorded as rent expense 12.000 debit and cash 12,000 credit. For sales, cash 10,000 debit and sales 10,000 credit.

Step # 3: Correcting entry:
Sales was wrongly recorded as 12,000 instead of 10,000 so it should be reduced by 2,000. Rent expense should have been recorded as 12,000 instead of 14,000 so it should also be reduced. decrease in sales recorded as debit by 2,000 and decrease in rent expense recorded as credit by 2,000.


(e) ERROR OF ORIGINAL ENTRY:

Cash sales of Rs.3,200 was wrongly recorded as Rs.2,300. There is an error made in the amount.

Step # 1: What was the double entry?
Company made the entry as Cash 2,300 Debit and sales 2,300 credit instead of debiting cash by 3,200 and crediting sales by 3,200.

Step # 2: What should the double entry have been?
Company should have been recorded entry as cash 3,200 debit and sales 3,200 credit.

Step # 3: Correcting entry:
Cash and sales both are understated by the company in error. For rectification, company should increase the case and sales as well. increase in cash recorded as debit and increase in sales recorded as credit with the difference amount 900.


(f) REVERSAL OF ENTRIES:
Cash sales was wrongly debited to sales account and credited to cash account.

Step # 1: What was the double entry?
Company made sales debit by 20,000 and cash credit by 20,000 in error.

Step # 2: What should the double entry have been?
Company should have been recorded the entry as cash 20,000 debit and sales 20,000 credit.

Step # 3: Correcting entry:
Company decreased the cash and sales as well. For rectification, cash and sales both should be increased by double amount. Increase in cash recorded as debit with 40,000 and increase in sales recorded as credit with 40,000.



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