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The purpose of a trial balance is to prove the accuracy of the General Ledger accounts of a business. However, the “balancing” of the debit side and the credit side of a trial balance does not guarantee that there is no error in the General Ledger accounts.
i. State TWO uses of a trial balance to an entity. (2 Marks)
ii. State FOUR errors that may lead to difference in trial balance total figures. (2 Marks)
iii. State FOUR errors that may NOT affect the “balancing” of a trial balance. (2 Marks)
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a) State and explain TWO (2) errors that will not affect the balancing of the trial balance. (4 marks)
b) The trial balance of Pak Ltd has an excess of credit over debit of GH¢12,500. A suspense account has been opened to balance the accounts. The following transactions were later discovered:
i) Interest paid of GH¢5,000 and Interest received of GH¢8,000 have both been entered on the wrong side of the trial balance.
ii) The receivable control account balance of GH¢224,387 had been included in the trial balance as GH¢242,387.
iii) Sales of GH¢2,000 had been omitted from the sales records (i.e., from the sales day book).
iv) Purchase of raw material of GH¢4,005 was entered in the purchase account as GH¢4,500.
v) The balance on the current account with the Proprietor’s wife had been omitted from the trial balance. This item when corrected will clear the suspense account.
Required:
Open a suspense account and correct the above transactions in it. (6 marks)
c) ABC Ltd has prepared its October 2018 bank reconciliation for auditors to review. As at 31 October 2018 the ledger balance was GH¢2,450 (Credit) but the bank statement showed that the company has funds amounting to GH¢3,743.
The following are useful information:
Required:
i) Prepare the bank account in ABC Ltd nominal ledger including any adjusting entries based on the information above. (5 marks)
ii) Prepare a reconciliation of the bank statement balance to the corrected balance on the bank account in ABC Ltd nominal ledger. (5 marks)
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a) When there is a difference in a trial balance, a suspense account is opened with the amount of the difference so that the trial balance agrees (pending the discovery and correction of the errors causing the difference). This is the only time an entry is made in the records without a corresponding entry elsewhere. Not all types of errors affect the balancing of the records and the suspense account.
Required:
Identify and explain THREE errors that do not affect the suspense account. (6 marks)
b) The Bank Account in the books of Akwatia Ltd for the month of October 2017 was as follows:
The following is the bank statement for Akwatia Ltd for the month of October 2017
The bank has confirmed to Akwatia Ltd that it made errors in Akwatia’s bank account on 6 October 2017 and 21 October 2017 amounting to GH¢950 and GH¢600, respectively.
Required:
Prepare the bank reconciliation statement for Akwatia Ltd as at 31 October 2017. (14 marks)
Find Related Questions by Tags, levels, etc.
Find Related Questions by Tags, levels, etc.
The purpose of a trial balance is to prove the accuracy of the General Ledger accounts of a business. However, the “balancing” of the debit side and the credit side of a trial balance does not guarantee that there is no error in the General Ledger accounts.
i. State TWO uses of a trial balance to an entity. (2 Marks)
ii. State FOUR errors that may lead to difference in trial balance total figures. (2 Marks)
iii. State FOUR errors that may NOT affect the “balancing” of a trial balance. (2 Marks)
Find Related Questions by Tags, levels, etc.
a) State and explain TWO (2) errors that will not affect the balancing of the trial balance. (4 marks)
b) The trial balance of Pak Ltd has an excess of credit over debit of GH¢12,500. A suspense account has been opened to balance the accounts. The following transactions were later discovered:
i) Interest paid of GH¢5,000 and Interest received of GH¢8,000 have both been entered on the wrong side of the trial balance.
ii) The receivable control account balance of GH¢224,387 had been included in the trial balance as GH¢242,387.
iii) Sales of GH¢2,000 had been omitted from the sales records (i.e., from the sales day book).
iv) Purchase of raw material of GH¢4,005 was entered in the purchase account as GH¢4,500.
v) The balance on the current account with the Proprietor’s wife had been omitted from the trial balance. This item when corrected will clear the suspense account.
Required:
Open a suspense account and correct the above transactions in it. (6 marks)
c) ABC Ltd has prepared its October 2018 bank reconciliation for auditors to review. As at 31 October 2018 the ledger balance was GH¢2,450 (Credit) but the bank statement showed that the company has funds amounting to GH¢3,743.
The following are useful information:
Required:
i) Prepare the bank account in ABC Ltd nominal ledger including any adjusting entries based on the information above. (5 marks)
ii) Prepare a reconciliation of the bank statement balance to the corrected balance on the bank account in ABC Ltd nominal ledger. (5 marks)
Find Related Questions by Tags, levels, etc.
a) When there is a difference in a trial balance, a suspense account is opened with the amount of the difference so that the trial balance agrees (pending the discovery and correction of the errors causing the difference). This is the only time an entry is made in the records without a corresponding entry elsewhere. Not all types of errors affect the balancing of the records and the suspense account.
Required:
Identify and explain THREE errors that do not affect the suspense account. (6 marks)
b) The Bank Account in the books of Akwatia Ltd for the month of October 2017 was as follows:
The following is the bank statement for Akwatia Ltd for the month of October 2017
The bank has confirmed to Akwatia Ltd that it made errors in Akwatia’s bank account on 6 October 2017 and 21 October 2017 amounting to GH¢950 and GH¢600, respectively.
Required:
Prepare the bank reconciliation statement for Akwatia Ltd as at 31 October 2017. (14 marks)
Find Related Questions by Tags, levels, etc.
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