Rectifying Error in Accounting: Credit Sales of Goods Recorded in Purchase Book

Error in accounting is a common occurrence that can lead to discrepancies in financial statements. Rectifying the error is crucial to ensure accuracy and reliability of financial information. In this case, a credit sale of goods amounting to Rs 1200 to Ramesh has been wrongly passed through the purchase book. To rectify this error, the following steps can be taken:

Identify the Error

The first step in rectifying the error is to identify it. In this case, the error is that a credit sale of goods has been recorded in the purchase book instead of the sales book.

Reverse the Entry

Once the error has been identified, the next step is to reverse the entry. This means that the entry in the purchase book needs to be cancelled and a new entry needs to be made in the sales book. The following journal entry can be made to reverse the entry:

Sales A/C Dr. Rs. 1200
To Ramesh A/C Rs. 1200

This entry will reduce the balance in the sales account and increase the balance in the Ramesh account.

Make Correct Entry

After the entry has been reversed, a new entry needs to be made in the sales book to record the credit sale to Ramesh. The following journal entry can be made to record the sale:

Ramesh A/C Dr. Rs. 1200
To Sales A/C Rs. 1200

This entry will increase the balance in the sales account and decrease the balance in the Ramesh account.

Update Ledgers

The final step in rectifying the error is to update the ledgers. The ledger for the sales account and Ramesh account needs to be updated with the correct entries to ensure that the balances are accurate.

Conclusion

Rectifying errors in accounting is crucial to ensure accurate financial information. In this case, the error of recording a credit sale in the purchase book has been rectified by reversing the entry and making a correct entry in the sales book. Updating the ledgers completes the process of rectifying the error.

Ramesh a/c dr. 2400
to sales a/c 1200
to purchase a/c. 1200