Rectification errors

Save Share

Join Us Follow Us Add as Source

This query is : Resolved

Report Query Ask a Query

suresh

suresh (Querist)

05 July 2013 (b) Danielle posted a $90 utility expense as $900. The credit to cash was correct

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

21 July 2013 what is the query

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

20 July 2025 What’s the error?
Debit (Utility Expense) was overstated by $810 ($900 - $90).
Credit (Cash) is correctly posted as $90.
So, debits and credits do not balance.
Rectification entry needed:
To correct this, you need to reduce the Utility Expense by $810 to fix the overstated debit.

Journal entry to rectify:

Utility Expense Dr. $810
To Cash Cr. $810
Explanation:
Since the cash credit was only $90 but utility expense debit was $900, there's an extra debit of $810.
You credit cash by $810 to balance, but cash is already correctly credited.
So instead, to fix the imbalance, you need to credit Utility Expense to bring it down from $900 to $90.
Actually, since cash was correctly credited for $90, the extra $810 debit needs to be reversed by crediting Utility Expense:

Better rectification entry:

Utility Expense Cr. $810
To Suspense / Cash / Other relevant A/c Dr. $810
But since cash is correct, use Suspense or correct the debit side only.

Simpler way:

Just credit Utility Expense by $810 to reduce it:

Utility Expense Cr. $810
To Suspense A/c (or Adjusting Account) Dr. $810
Then investigate the source of extra $810 debit.

In short:

Since cash is correct, reduce the overstated Utility Expense by $810.
The balancing entry can go to Suspense or a relevant clearing account until corrected.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now