Effect of Posting a Wrong Amount

If a wrong amount is posted to the ledger from a subsidiary book, the effect is confined to that account only in the ledger. The total of the relevant subsidiary book posted to the ledger will still be correct and, therefore, does not need rectifying.

Example

A credit note for $450 was issued to David. It was recorded correctly in the returns inwards book but posted to the Cr. of his personal account as $480.

It follows that the total of the returns inwards book will be correctly posted to the returns inwards account in the ledger, whereas David’s personal account is over-credited by $30.

David's Rectification Entry For Wrong Amount Posted to the Ledger

An invoice for $1,380 issued to John was recorded correctly in the sales book but posted to the Dr. side of his personal account as $1,830.

It follows that the total of the sales book will be correctly posted to the ledger’s sales account, whereas John’s personal account is over-debited by $450.

John's Rectification Entry For Wrong Amount Posted to the Ledger

Frequently Asked Questions

Can an amount be posted to the ledger that is different from that of the subsidiary book?

Yes, provided it is recorded correctly in one of the subsidiary books. After checking and correct postings elsewhere, just delete the incorrect total of this account.

What will happen if a wrong amount is posted to the ledger's nominal accounts?

It will be an incorrect total of the nominal account and is likely to be corrected.

If a wrong amount is posted and is discovered part-way through the year, what should we do?

If it has been posted correctly in one subsidiary book but incorrectly in another, all is not lost. Just delete the incorrect total from this account. If it has been posted incorrectly in both subsidiary books, all is still not lost. Just delete the total from this account and make a note of the incorrect posting.

What if it wasn't discovered until after year-end?

The best thing to do is just to explain clearly in your management accounts why there was a difference between the total of this account and the true figure.

What if it is found out that a wrong amount was posted to the ledger by mistake?

Before you do anything, just check all surrounding postings and finally double-check that the error has been found. Then delete the wrong total from this account.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.