Debtors balance - Previous year

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An accounting error occurred in the previous financial year where a customer's bank receipt against sales was incorrectly booked as a cash sale, while the sales entry was also recorded as a credit sale in the party's account. This has resulted in the customer's account showing the received amount as a receivable. The suggested rectification involves reversing the incorrect entries and passing the correct ones, potentially through prior period adjustments or by directly debiting the credit sales account and crediting the customer account.

Sarath raj

Sarath raj (Querist)
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10 March 2020 Sir,

One of our customer's bank receipt agst sales has been accounted as cash sales and same time sales entry booked in parties A/c as credit sales in the PY. Finalization & filing of PY already over.
Now Customer A/c showing, received amount as receivable.

Could you please suggest a way to rectify this error?

Eswar Reddy S

Eswar Reddy S (Expert)
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10 March 2020 If it was cash sale & if it has recorded as credit sale then that much cash/bank balance would have been under stated. Now Pass an entry:: Cash A/c Dr To Debtor You can also adjust through prior period items

kamlesh

kamlesh (Expert)
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10 March 2020 Do reverse entry on 1st April

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Eswar Reddy S

Eswar Reddy S (Expert)
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10 March 2020 Yes, you can do reverse entry for credit sale and pass the entry for cash sale . effect is same..

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Sarath raj

Sarath raj (Querist)
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11 March 2020 Thanks for the information sir.

Let me explain the entries which I've put in PY.

Bank A/c Dr
To Sales A/c
&
Customer A/c Dr
To Sales A/c
(Net effect -
Double entry on sales A/c & Customer a/c showing debit balance, which is not receivable)

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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22 May 2020 Since you have credited credit sale instead of cash sale and debited the customer account instead of Cash, you need to now DEBIT Credit Sales Account and CREDIT Customer Account.

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