The City School

Gulshan Boys Campus

Senior Section
Correction of Errors
Errors made in recording of the day-to-day transactions can be divided into:
 those which are not revealed by the trial balance.
 those which result in the trial balance not balancing.

Errors which are not revealed by the trial balance:

When such errors are discovered, they should be corrected by means of a journal entry before making
entries in the appropriate ledger accounts. These are:

Entries
Name of Errors Description of Error Examples
Original Error Corrected
This occurs when a
transaction is entered using
Cheque received
Error of the correct amount and on
from Wasim Bank Bank Nasim
Commission the correct side, but in the
credited to Nasim’s Wasim Nasim Wasim
wrong account of the same
account.
class
This occurs when the
transaction has been
Payment of wages
Error of completely omitted from
not entered in the Wages No entry Wages
Omission the accounting record.
books. Bank was made Bank
Neither a debit nor a credit
entry has been made.
This occurs when a
transaction is entered using Motor expenses Motor
Error of Motor Exp Motor Exp
the correct amount and on debited to the motor Vehicle
Principle Bank MV
the correct side, but the in vehicles account. Bank
the wrong class of account.
This occurs when the Cash drawing (Double
Error of correct amount is entered debited to the cash Drawing Cash Figure)
complete in the correct account but account and credited Cash Drawing
reversal the entry has been made on to the drawing Drawing
the wrong side. account. Cash
This occurs when an (Difference
incorrect figure is used of Figure)
when a transaction is first Goods, $100, bought Purchase Purchase
Error of Original Purchase
entered in the accounting on credit but XYZ Co XYZ Co
Entry XYZ Co
records. The double entry recorded as $1000.
will therefore use the
incorrect figure.
Purchases account
This occurs when two or over added by $100 Purchase Ret. Inw
Compensating
more errors cancel each and sales returns - Ret. Inw. Purch.
errors.
other out. account under added
by $100.
Example- 1:

Winston is a trader. He is not an experienced bookkeeper, but has prepared the Trial Balance. However,
the following errors were then discovered.

 Winston had withdrawn $500 from the business bank account for personal use. This had not been
recorded.

 The wages and salaries account had been under-cast by $10 and the general expenses account had
been over-cast by $10.

 An invoice for goods sold on credit had been recorded in the books as $800 instead of $600.

 Rent paid $1010, had been debited to the bank account and credited to the rent account.

 Motor expenses $430, had been debited to the motor vehicles account

 Winston paid to Carl $1000, but debited the account of Sam.

Required:
a. State the type of error in each case above.
b. Prepare the necessary journal entries to correct these errors.

Debit Credit
Date Details
$ $
Example - 2:
Miranda prepared her draft financial statements for the year ended 30 April 2009 and calculated a
profit for the year of $14,670. After the preparation of the draft financial statements the following
errors were discovered, which had not been revealed by the trial balance.
 Goods, $2000, purchased on credit from A Morston had not been entered in the accounting
records.
 Goods, $650, sold on credit to T Cley had been correctly entered in the sales account but had
been entered into the account of C Tilley.
 A motor vehicle expense, $500, for the year had been posted to the motor vehicles account.
 A discount received from L Staithe of $190 had been entered in the discount allowed column
in the cash book and credited to the account of L Staithe.
Required:
(a) Name the type of error in (i) to (iv) above.

______________________________________ _________________________________

______________________________________ _________________________________

(b) Prepare the journal entries required to correct each of the errors (i) to (iv).

Debit Credit
Date Details
$ $