Explanation

If a transaction is recorded in the subsidiary book with the incorrect amount, both the debit and credit entries made subsequently in the ledger will be incorrect despite being equal in terms of figures. Of course, this will not affect the trial balance.

Effect on Accounts

The effect on accounts will be either one of the following:

  • If the recorded transaction is less than the correct amount, the relevant ledger accounts will be under-debited and under-credited.
  • If the recorded transaction is more than the correct amount, the relevant ledger accounts will be over-debited and over-credited.

Rectification Entry

If a transaction is recorded at less than the correct amount:

  • Debit the difference to the under-debited account
  • Credit the difference to the under-credited account

If a transaction is recorded in the subsidiary book at more than the correct amount:

  • Debit the difference to the over-credited account
  • Credit the difference to the over-debited account

Example

An invoice issued to Sara Jason for $4,760 was entered into the sales book at $4,670 and posted to the ledger accordingly. As such, the account was under-debited by $90, while the sales account was under-credited by the same amount.
Sara Jason Rectification Entry
A check for $2,390 was received from David. It was recorded in the cash book and posted to the ledger at $2,930. This means that the cash at bank account was over-debited and David’s account was over-credited by $540.
David Rectification Entry

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