E T B I C MBA AGU I

rectify the entry:goods worth rs,1500 bought by mr.BESRA for personal use without payment made, was wrongly entered in purchase book.

rectify the entry:goods worth rs,1500 bought by mr.BESRA for personal use without payment made, was wrongly entered in purchase book............................................plz give reason

asked Oct 28, 2014 in Rectification of Errors by vasu (7 points) 425 views

1 Answer

0 votes
 
Best answer
Purchase Book is meant to record goods purchased on credit for business purposes (to be sold later at profit or to be used as raw material in a process).  In the questions some items have been bouht on credit by the Proprietor for his personal use.  This transaction should not have been entered in Purchase Book. Now the business will have to make payment for proprietor's personal purchases, it should be treated as Drawings.  

Wrong entry is:

Purchase A/c       Dr.   1500

  To Sundry Creditors                1500

Correct entry should have been:

Drawings A/c      Dr.     1500

  To Sundery Creditors              1500

Rectifying entry would be:

Drawings A/c     Dr.        1500

  To Purchases                            1500

answered Oct 28, 2014 by jbsclasses (3,967 points)
selected Oct 31, 2014 by vasu
why the correct entry will be                   drawings dr

                                                                  to sundry creditor

why not                                                drawing dr

                                                                 to purchases

 

goods withdrawn entry is      drawing dr

                                                to purchases
Correct entry means the entry which should have been made:

Simple fact is that proprietor bought some goods on credit for which payment will be made by the firm. Two aspects of this transaction are: 1.  goods have been bought for personal use of proprietor-hence drawings, 2. As goods have been bought on credit, a new creditor has been created.  Hence correct entry should have been:

Drawings A/c   Dr.

    To Creditors
...