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Read the following hypothetical Case Study and answer the given questions:
An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered:
Salary for the month of March was posted twice ₹155.
Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75.
Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account.
A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56.
Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore.
Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both.
Closing Stock has been undervalued by ₹300.
The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016.
Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?
- a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)
- b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)
- c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)
- d)No entry will be passed
Correct answer is option 'B'. Can you explain this answer?
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Read the following hypothetical Case Study and answer the given quest...
The journal entry for the balance of Profit and Loss Adjustment Account
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Profit & Loss Adjustment A/c Dr. 300
To Capital A/c 300
(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)
Most Upvoted Answer
Read the following hypothetical Case Study and answer the given quest...
Understanding the Profit and Loss Adjustment Account
In this case study, the Profit and Loss Adjustment Account is used to rectify discrepancies found in the financial records. The balance of the Profit and Loss Adjustment Account represents the cumulative errors that need to be addressed to reflect the true financial position of the entity.
Rationale for Option B
- The correct journal entry states:
Profit & Loss Adjustment A/c Dr. 300
To Capital A/c 300
(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)
- This entry indicates that the adjustments made in the Profit and Loss account affect the overall capital of the business.
Key Points of the Journal Entry
- The adjustment of ₹300 indicates that the previous net profit of ₹15,000 was overstated due to various errors like overstatement of income or understatement of expenses.
- By transferring this amount to the Capital Account, it helps in correcting the owner's equity reflecting the true profit available for distribution or reinvestment.
- It ensures that the net profit reflects an accurate financial position, considering the adjustments for errors and omissions.
Conclusion
Making this adjustment is crucial for maintaining accurate financial records. The adjustment improves the integrity of the financial statements, ensuring that stakeholders have a true understanding of the company’s profitability and financial health. Hence, option B is the appropriate choice for this scenario.
In this case study, the Profit and Loss Adjustment Account is used to rectify discrepancies found in the financial records. The balance of the Profit and Loss Adjustment Account represents the cumulative errors that need to be addressed to reflect the true financial position of the entity.
Rationale for Option B
- The correct journal entry states:
Profit & Loss Adjustment A/c Dr. 300
To Capital A/c 300
(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)
- This entry indicates that the adjustments made in the Profit and Loss account affect the overall capital of the business.
Key Points of the Journal Entry
- The adjustment of ₹300 indicates that the previous net profit of ₹15,000 was overstated due to various errors like overstatement of income or understatement of expenses.
- By transferring this amount to the Capital Account, it helps in correcting the owner's equity reflecting the true profit available for distribution or reinvestment.
- It ensures that the net profit reflects an accurate financial position, considering the adjustments for errors and omissions.
Conclusion
Making this adjustment is crucial for maintaining accurate financial records. The adjustment improves the integrity of the financial statements, ensuring that stakeholders have a true understanding of the company’s profitability and financial health. Hence, option B is the appropriate choice for this scenario.
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Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer?
Question Description
Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer?.
Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for Commerce.
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Here you can find the meaning of Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Read the following hypothetical Case Study and answer the given questions:An accountant while balancing his books on 31st December 2016 found that there was a difference of ₹270 in the trial balance. Being required to prepare the final accounts he placed the difference to a newly opened Suspense A/c, which was carried forward to the next year when the following errors were discovered: Salary for the month of March was posted twice ₹155. Interest on investment collected by the bankers, were posted directly in concerned accounts through the pass book, but no entry was made in the bank column of the cash book ₹75. Rent of ₹350 received from Ashok credited both to Rent Account and Ashok Account. A purchase of a chair from Karnal Furniture Mart for ₹65 has been entered in the purchase book as ₹56. Old Machinery sold to the proprietor Keshav for ₹400 was entered in the Sales Book as sale to Kishore. Cash Purchases from Ajay ₹189 were recorded in Cash Book as well as in Purchases Book and posted from both. Closing Stock has been undervalued by ₹300. The Profit & Loss Account disclosed a net profit of ₹15,000 for the year ended 31st March 2016. Q. What will be the journal entry for the balance of Profit and Loss Adjustment Account?a)Profit & Loss Adjustment A/c Dr. 300To Suspense A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Suspense A/c)b)Profit & Loss Adjustment A/c Dr. 300To Capital A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Capital A/c)c)Profit & Loss Adjustment A/c Dr. 300To Profit & Loss Appropriation A/c 300(Being balance of Profit & Loss Adjustment A/c transferred to Profit & Loss Appropriation A/c)d)No entry will be passedCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice Commerce tests.
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