Entry recorded incorrectly as a debit or credit
This type of error occurs when part of a transaction is recorded on the wrong side of the General Ledger account. This will cause a difference between the totals of the debit and credit columns of the trial balance and a Suspense account will be opened.
This type of error can be corrected using either two journals (the first to cancel the effects of the incorrect entry and the second to enter the correct amount) or a single journal.
Illustration
A bookkeeper has prepared the following trial balance.
As there is a difference between the totals of the debit and credit columns, a suspense account would be opened using a journal. The journal and ledger account are shown below.
The trial balance is then updated to include the Suspense account
The bookkeeper investigated the matter and found that the totals of the Purchase Day Book had been posted as follows:
The amount posted to the Purchases account was incorrect, the £1,450 should have been posted to the debit side of the ledger account and not the credit.
This error can be corrected using either two journals (the first will cancel the effect of the error and the second will record what should have been posted originally) or a single journal and we will illustrate both approaches.
Correcting the error using two journals
The first journal will cancel the incorrect entry made in the Purchases account with the balance being sent to the Suspense account.
The second journal will then record the amount that should have been posted to the Purchases account originally and the balance will be sent to the Suspense account. Note that the journal entries are identical to the first journal.
The above journals will then be entered in the General Ledger accounts and the ledger accounts recalculated.
Correcting the error using a single journal
Alternatively, the error can be corrected using a single journal which would then be entered into the General Ledger accounts (note that the amounts posted are simply twice the size of the amount that was originally posted incorrectly).
Whichever method is used the trial balance would be updated and look as follows:
