Errors in original entry

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Explanation

If a transaction is recorded at an incorrect amount in the subsidiary book, both the debit and credit entries made subsequently in the ledger would be incorrect though equal in figures. This will obviously not affect the trial balance.

Effect on accounts

This will be either of the following:

  • If the transaction is recorded at less than the correct amount the relevant ledger accounts would be under-debited and under-credited.
  • If the transaction is recorded at more than the correct amount, the relevant ledger accounts would be over-debited and over-credited.

Rectification entry

If a transaction is recorded at less than the correct amount:

  • Debit the account that has been under-debited, with the amount of difference.
  • Credit the account that has been under-credited, with the amount of difference.

If a transaction is recorded in the subsidiary book at more than the correct amount:

  • Debit the account that has been over-credited, with the amount of difference.
  • Credit the account that has been over-debited, with the amount of difference.

Example

An invoice for $4,760 issued to Sara Jason was entered in sales book at $4,670 and posted to ledger accordingly. (This means Sara Jason account has been under-debited by $90 while sales account has been under-credited by the same amount)

error in original entry

A cheque for $2,390 received from David recorded in the cash book and posted to ledger at $2,930. (This means Cash at Bank Account was over-debited and David Account was over-credited by $540.)

error in original entry example

2 thoughts on “Errors in original entry”

  1. Nipress says:

    Does the difference amount involved in the correction of errors of original entry given to the debtor after being rectified?

  2. Zain says:

    Types of original entry they effect trail balance and not explain it

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