Rectification errors

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suresh

suresh (Querist)
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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)
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21 July 2013 what is the query

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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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.

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