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CMA Foundation · Fundamentals of Financial and Cost Accounting · Adjustment Entries and Rectification of Errors

Salary paid to a clerk, ₹6,500, was debited to the clerk's personal account instead of the Salary account. The correct rectifying entry is:

Debit Salary account and credit the clerk's personal account by ₹6,500. The original entry wrongly debited the clerk, so crediting him cancels it and debiting Salary puts the expense in the correct account. Cash was correctly credited originally, so it is not touched, and no suspense is needed.

  1. ADebit Salary account ₹6,500; Credit Clerk's personal account ₹6,500Correct
  2. BDebit Clerk's personal account ₹6,500; Credit Salary account ₹6,500
  3. CDebit Salary account ₹6,500; Credit Cash account ₹6,500
  4. DDebit Suspense account ₹6,500; Credit Clerk's personal account ₹6,500

Explanation

The wrong entry debited the clerk's personal account instead of Salary. To rectify, the Salary account must be debited, which is the right account, and the clerk's account must be credited to cancel the wrong debit. Cash was already credited correctly, so no cash entry is needed, and no suspense account is needed since both sides are in balance.

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