Kimberly Hudson extracted a trial balance on 31 December, 2002 which failed to agree by $1,330,...

Transcribed Image Text:

Kimberly Hudson extracted a trial balance on 31 December, 2002 which failed to agree by $1,330, a shortage on the debit side of the trial balance. A Suspense account was opened for the difference. (Narratives are not required) In March 2003 the following errors made in 2002 were found: 1. A motor vehicle having a book value of $890 had been sold for $1100 cash. This amount had been credited in error to the sales account. 2. The Advertising account had been overcast by $560. 3. A credit note sent to a debtor for $175 was entered in the returns inwards account but was omitted from the debtor's account, 4. A payment of $905 made to A. Thomas was debited in error to A. Thom's account. 5. Bank charges for $465 appeared in the cash book but had not been posted to the bank charges account in the ledger. 6. Bad debts $450 to be written off H. King's account was completely overlooked. 7. $1065 received from the sales of old office machinery had been entered in error in the sales account. 8. Purchases account undercast by $1600. 9. Capital invested by the owner $8,000 by cheque. The capital account had been debited and the bank account credited. 1 10. An item of office machinery purchased for $1,570 had been written off against repairs. You are required to: (a) Show the journal entries necessary to correct the errors. (b) Draw up the suspense account after the errors described have been corrected. (c) If the net profit had previously been calculated at $15,230 for the year ended 31 December 2002, show the calculation of the corrected net profit. Kimberly Hudson extracted a trial balance on 31 December, 2002 which failed to agree by $1,330, a shortage on the debit side of the trial balance. A Suspense account was opened for the difference. (Narratives are not required) In March 2003 the following errors made in 2002 were found: 1. A motor vehicle having a book value of $890 had been sold for $1100 cash. This amount had been credited in error to the sales account. 2. The Advertising account had been overcast by $560. 3. A credit note sent to a debtor for $175 was entered in the returns inwards account but was omitted from the debtor's account, 4. A payment of $905 made to A. Thomas was debited in error to A. Thom's account. 5. Bank charges for $465 appeared in the cash book but had not been posted to the bank charges account in the ledger. 6. Bad debts $450 to be written off H. King's account was completely overlooked. 7. $1065 received from the sales of old office machinery had been entered in error in the sales account. 8. Purchases account undercast by $1600. 9. Capital invested by the owner $8,000 by cheque. The capital account had been debited and the bank account credited. 1 10. An item of office machinery purchased for $1,570 had been written off against repairs. You are required to: (a) Show the journal entries necessary to correct the errors. (b) Draw up the suspense account after the errors described have been corrected. (c) If the net profit had previously been calculated at $15,230 for the year ended 31 December 2002, show the calculation of the corrected net profit.

Answer rating: 100% (QA)

Correction 1 Motor Vehicle Sale Account Debit Credit Sales Account 1100 Suspense Account 1100 Correc... View the full answer