Accounting · Rectification of Errors and Cash Book
An organization maintains a columnar cash book to record various types of transactions including cash, bank, and discount allowed. During the month-end reconciliation, the accountant discovers that a check received from a customer for ₹45,000 was recorded in the bank column but was subsequently dishonored by the bank due to technical reasons. However, the accountant had already closed the books for the period. In the context of maintaining subsidiary books and the impact on the ledger, which of the following represents the most accurate accounting treatment to rectify this situation in the subsequent period?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Adjust the opening balance of the Bank account in the Ledger directly without passing any entry in the Subsidiary books.
- 2Make a contra entry in the Cash Book by debiting the Bank column and crediting the Cash column to reflect the return of funds.
- 3Debit the Cash account and Credit the Bank account in the Cash Book to nullify the effect of the previous entry.
- 4Credit the Bank account and Debit the Customer account in the Journal Proper since the cash book for the previous period is closed.✓
Correct answer
Credit the Bank account and Debit the Customer account in the Journal Proper since the cash book for the previous period is closed.
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