- 15 Marks
FA – Nov 2020 – L1 – SB – Q3b – Correction of Errors
Provide journal entries to correct errors and prepare a suspense account.
Question
Your subordinate in POP-Two Ventures, an inexperienced bookkeeper, has informed you that the trial balance failed to agree by a difference of N170,000, recorded on the credit side of a suspense account. After investigating, you discovered the following errors:
| Errors | Amount (N’000) |
|---|---|
| Cash payment debited to the bank cash book | 360 |
| Overcasting of sales | 700 |
| Overcasting of purchases | 700 |
| Returns inwards omitted from the books | 380 |
| Bank charges posted into the cash book without a corresponding entry elsewhere | 370 |
| Opening receivables balance brought down incorrectly | 180 |
| PPE sold, credited to sales account instead of the correct account | 5,000 |
Required:
i. Effect the necessary corrections by means of journal entries (11 Marks)
ii. Prepare the suspense account (4 Marks)
(Total 15 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Financial Corrections, Journal Entries, Suspense Accounts, Trial Balance Errors
- Level: Level 1
- Topic: Correction of errors
- Series: NOV 2020
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