Multiple choice

Dividend of Rs. 200 is collected by bank on behalf of customer, but is entered in the debit side of Bank Column of Two - Columnar Cash Book as Rs. 2,000 by the customer. What will be the rectifying entry made in the Two - Columnar Cash Book?

  1. Rs. 1,800 is to be entered in the credit side of bank column.

  2. Rs. 1,800 is to be entered in the debit side of bank column.

  3. Rs. 1,800 is to be entered in the credit side of cash column.

  4. Rs. 2,000 is to be entered in credit side of bank column.
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A Correct answer
Explanation

This is correct.

The dividend collected by bank is of Rs. 200 and hence bank balance would be increased by Rs. 200, which is to be entered in the debit side of bank column. But instead Rs. 2,000 is entered in its debit side. Thus, Rs. 1,800 is entered in excess in the debit side (Rs. 2,000 Rs. 200). Therefore, Rs. 1,800 would now be entered in the credit side of bank column to nullify the mistake made.

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