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Final account
Accountancy
What is the effect of this error on final accounts? Purchases include sales return of 10,300 and sales include purchases return of 6,900.
Answers (13)
Here, in this case the net effect on the profit and loss account is zero. Because purchase a/c and sales return a/c generally has a debit balance so the treatment for the both is same. Likewise the sales a/c and the purchase return a/c generally has a credit balance so they both have same kind of treatment.
Vijay K
I assume that the sale and the purchase are made in credit basis. Correct me if I am wrong.
Yes bro.... you are correct ð???
Vijay K
Here, in this case the net effect on the profit and loss account is zero. Because purchase a/c and sales return a/c generally has a debit balance so the treatment for the both is same. Likewise the sales a/c and the purchase return a/c generally has a credit balance so they both have same kind of treatment.
What is effect on trading account and balance sheet?
Thread Starter
Rakesh ShahWhat is effect on trading account and balance sheet?
Bro, I already said about the effect in the ways of journal entry. What else you didn't understand. Please clear yourself.
Thread Starter
Rakesh ShahWhat is effect on trading account and balance sheet?
Here, in this case the gross profit in the trading a/c will not be changed. It's just the value of the respective a/c will be changed. I already explained it clearly in the above chat fo the treatment of these accounts.
1) correct entry : Sales return a/c. Dr. 10,300 To Debtors's a/c. 10,300 Wrong entry : Purchases a/c Dr. 10,300 To Debtor's a/c. 10,300 Rectification entry : Sale's Returns a/c. Dr. 10,300 To Purchases a/c. 10,300 2) correct entry : Creditors 's a/c. Dr. 6,900 To Purchase return a/c. 6,900 Wrong entry : Creditor's a/c. Dr. 6,900 To Sales a/c. 6,900 Rectification entry : Sales a/c. Dr. 6,900 To Purchase Returns a/c. 6,900
