Rectification errors
This query is : Resolved
05 July 2013
(b) Danielle posted a $90 utility expense as $900. The credit to cash was correct
21 July 2013
what is the query
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.
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
Click here to login now
Similar Resolved Queries
Unanswered Queries
- TDS 194-T applicability
- GST ITC REVERSE
- Fixe term employment
- Is any professional CA is here please reply
- Consolidated financials
- TDS on TRUST
- Withdrawal in cash from partners capital account by partner
- TDS on Complimentary "Desi Ghee and Gold Coin" Provided to KBC Contestants
- RCM ISSUE ON RENT AND TRANSPORTATION CHARGES
- Section 50-fixed asset-->building ceases to exist
- Regime change
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
