Examination and exercise questions will ask you to correct given errors by:
Showing corrections by means of journal entries
Showing the corrections in the double entry set of accounts, by posting these journal entries to the ledger accounts affected
Take care to only do as much as you are asked to do and no more
For example do not show double entry accounts when you are asked to show only journal entries
Entries to correct errors in the accounts
Error of omission
For example the sale of goods, $125 to E Gore, has been completely omitted from the books. We must correct this by entering the sale in the books. The following Journal Entries and corresponding will correct this error:
Journal/General Journal
Date
Details
DR
CR
31 December
E Gore
125
Sales
125
Being the record of Sales Invoice No: 134 which had been omitted from the books
DR
Debtor's Ledger
CR
E Gore Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
Sales
125
General Ledger
Date
Details
Amount($)
Sales Account
Date
Details
Amount($)
31 December
E Gore
125
Error of Commission
A purchase of goods, $54 from C Sango, was entered in error in C Senge’s account. To correct this, the purchase must be cancelled out of C Senge’s account, and then entered where it should be in C Sango’s account. The entries required to correct this are as follows:
Journal/General Journal
Date
Details
DR
CR
31 December
C Senge
54
C Sango
54
Being the record of Purchase Invoice No: 12 which had been entered into the wrong personal account
DR
Creditor's Ledger
CR
C Senge Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
C Sango
54
C Sango Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
C Senge
54
Error of Principle
The purchase of a machine, $200, is debited to the purchases account instead of being debited to
a machinery account. We therefore cancel the item out of the purchases account by crediting that
account. It is then entered where it should have been entered by debiting the machinery account. The following entries show the correction:
Journal/General Journal
Date
Details
DR
CR
31 December
Machinery Account
200
Purchases Account
200
Correction of error: purchase of fixed asset debited to purchases account
DR
General Ledger Ledger
CR
Machinery Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
Purchases
200
Purchases Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
Machinery
200
Compensating Errors
The sales account is overcast by $250, as also is the wages account. The trial balance therefore still balances. This assumes that these are the only two errors found in the books. It is possible to have three or more compensating errors two one side and one error on another side.
Journal/General Journal
Date
Details
DR
CR
31 December
Sales Account
250
Wages Account
250
Correction of overcasts of $250 each in the sales account and the
wages account which compensated for each other
DR
General Ledger Ledger
CR
Sales Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
Wages
250
Wages Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
Sales
200
Error of original entry
A sale of $82 to A Sando was entered in the books as $28. I means the Sales Account was understated by $54
now. The following entries will correct this error:
Journal/General Journal
Date
Details
DR
CR
31 December
A Sando Account
54
Sales Account
54
Correction of error whereby sales were understated by $54
DR
Debtor's Ledger
CR
A Sando Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
Wages
54
General Ledger
Sales Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
Sales
54
Complete reversal of entries
A payment of cash of $45 to M Danda was entered on the receipts side of the Cash Book in error and credited to M Danda’s account. These errors are a little tricky to correct.
First need to make entries to cancel out the error, Debit M Danda and Credit Cash with $45
Then comes the actual entry that must have been made: Debit M Danda and Credit Cash with $45
A shorthand way of recording this is to multiply the amounts recorded by two: Debit M Danda with $90 and Credit Cash with $90
Journal/General Journal
Date
Details
DR
CR
31 December
M Danda Account
90
Cash Account
90
Payment of cash $90 debited to cash and credited to
M Danda in error Error now corrected
DR
Cash Book
CR
Cash Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
M Danda
90
Creditor's Ledger
M Danda's Account
Date
Details
Amount($)
Date
Details
Amount($)
31 December
Cash
90
NB
Transposition errors are no for the most part no different from errors of original entries so the same entries will correct them
We are assuming that the errors are discovered on 31 December so correcting entries are made on that day