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QUERY OF RECIFICATION OF ERROR

nidhi jain (student) (177 Points)

17 October 2007

Hi,

Please solve my one query it is very complicated. This is from chapter of rectification of error:

A Cheque was received of Rs. 5000 for loss of stock by fire has been deposited in the proprietor's bank account.

Please tell the correct entry, what wrong entry has been passed & rectified entry.

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14 Replies

Prakash Popat (3134 Points)
Replied 17 October 2007

Tell wrong entry.

Shaily Jain (Chartered Accountants) (1054 Points)
Replied 17 October 2007

correct entry is Bank A/c Dr. To Insurance (if it is) or loss by fire well first told the wrong entry then b will more able to ans ur question

(Guest)

i know that the correct entry is Bank A/c Dr. To Loss by Fire But what entry should be passed for wrongly chq deposited into the proprietory's bank A/c

Rachana Gadage (Account Executive) (136 Points)
Replied 18 October 2007

Pls tell wrong entry and from whom recd Rs. 5000/-

Ramkrishna Mokashi (Chartered Accountant) (734 Points)
Replied 26 October 2007

Pass Following Entry Subject to note below; Capital A/c Dr To Loss By Fire (Or Anything from above forum messages) Note: I assumed that by "Deposited in Proprietor's Bank A/c" you mean the cheque of claim has been deposited in the proprietor's personal bank account and hence the books of account of the business would not contain any entry for this matter. Hence to bring the claim on books of account of the business, capital account is debited. There is an assumption that the bank account in which the cheque is deposited is not on the books of account in which the rectification entry is to be passed.

Nirmal1986 (articles) (149 Points)
Replied 29 October 2007

pls make clear the what wrong entry u have entered

CA Mohit Mohan (c.a. profession) (557 Points)
Replied 03 November 2007

i wonder what people write about this entry. ridculous. entry is DRAWINGS ACCOUNT DR. TO TRADING ACCOUNT. ONE THING MORE IT CANT BE WRONG. ALL CHALLENGES ACCEPTED FROM EVERYONE.

(Guest)

Hi, mohit mohan, Please explain the same as (1). what correct entry will be passed, (2). what wrong entry has been passed & (3). now what rectified entry has arrived.

CA Jai Prakash Rarh (Chartered Accountants) (45 Points)
Replied 05 November 2007

Hi Nidhi Since u have not provided what is the wrong entry? anyhow, it could be anything like e.g Dr. Nidhi Cr. JP (for cheque recieved from fala fala insurance co. etc. etc.). just joking! Lets suppose the wrong entry was as gieven by Mohit Mohan hu! Kyu Mohit u r challenging? While the entry passed when fire took place was as follows; Dr.- Insurance Claim Recievable a/c by Rs.5,000/- Cr.- Stock (Name the goods or type of stock) (under the group of Stock in Trade) by Rs. 5000/- (it is presumed settlement amount and loss is same) [narration - Being loss of stock due to fire is being claimed from the insurance Co.] Note- along with crediting the stock a/c, the respective stock register is also adjusted i.e. quantity is reduced from the stock in trade and hence the stock in trade will be reduced by the same amount of Rs.5000/- Now the wrong entry has already been passed by the Mohit Mohan by way of crediting TRADING ACCOUNT (thats too in capital letter, Hu!) Rectification entry is; Dr.- Trading Account by Rs.5,000/- Cr.- Insurance Claim Recievable a/c by Rs.5,000/- If i am right/ wrong please tell me. Mohit is also expected to see it. I am not challenging anyone at all. it may not be coreect but it seems to me logical and i tried to reflect the ultimate effect. the main issue is with the entry passed when fire took place and not the wrong entry and rectification entry. Thanks

Ankit Dangayach (Chartered Accountant) (691 Points)
Replied 05 November 2007

Following entry will be passed if cheque is correctly deposited in bank A/C of business
Bank A/c Dr. 5000
To Loss by Fire 5000
But as the cheque is deposited in Personal bank A/c following entry will be passed
Rectification Entry will be

Drawings A/c Dr 5000
To loss by fire 5000

At the year end following entry will be passed

Loss by Fire A/c Dr 5000
To P & L A/c 5000

CA Anil Jain (Chartered Accountant) (696 Points)
Replied 06 November 2007

The Correct entry Bank A/c Dr. To Loss by fire Wrong entry Drawing A/C Dr. To Loss by fire Now the rectified entry is Bank A/C Dr. To Drawing a/c But as u said the ch.has been deposited in Personal a/c but u hav not specified whether Wrong entry hav been passed or not U hav told only for wrong Deposition.moreover u hav not specified the wrong entry. Plz reply completely first. Any way Wish u a very happy Diwali Anil Jain