Errors in casting special journals

Definition and explanation

This error happens when the amounts recorded in a special journal are incorrectly totaled and posted to the relevant account in the general ledger. It means that there is no mistake in recording individual entries in the special journal; rather, this is the total of the amount column that is incorrectly computed and recorded in the ledger account. In case of this error, the ledger account would show an understated or overstated balance, creating a discrepancy in the trial balance.

These types of errors are commonly known as the errors in casting special journals, and they mostly occur due to the negligence of the company’s bookkeeper or accountant.

These casting errors may occur in any special journal (or book), including the purchases journal, the sales journal, the purchases returns journal, the cash receipts journal, and the cash disbursements journal.

Suppose, for example, the sales journal is cast $1,000 short. For this error, the general ledger sales account would be credited $1,000 short, and the total of the credit column of the trial balance would be $1,000 short. This will disturb the agreement of the debit and credit totals of the trial balance.

Example

Five Star Company uses a purchases journal to record all of its credit purchases. At the end of each month, the amount column is cast and posted to the general ledger purchases account. On January 31, the posting date, the company’s bookkeeper mistakenly cast the journal $500 short. The bookkeeper did not recheck the total and posted it to the debit side of the purchases account.

Required: What type of accounting error did the bookkeeper at Five Star Company commit? How would this error affect the company’s general ledger and trial balance?

Solution

1. Type of accounting error

The bookkeeper at Five Star Company has committed an error in casting the purchases journal. In accounting, a casting error means that the amounts listed in a special journal, ledger account, or trial balance have been wrongly totaled.

2. Effect of the casting error on general ledger and trial balance

Since the total of this journal is $500 short, the purchases account in the ledger would show a $500 lesser balance than it actually should have. If this understated balance is carried forward to the trail balance, the total of the debit column of the trial balance would be $500 short.