Logan has prepared the following trial balance at 31 March 2004.

Logan is unable to find the difference on the trial balance and has entered the difference in the Suspense Account. The following errors have been made in the accounts. 

1. Discount allowed of $55 has been posted to the credit of Discount received.

2. Purchase returns of $108 have been posted to the debit of Sales returns. 

3. A cheque for $400 from a debtor has been dishonoured, but no record has been made of this in the accounts. There is no reason to believe that payment will not be made in April 2004. 

4. Equipment bought during the year for $4400 has been debited to Purchases account. 

5. During the year Logan had taken stock which cost $800 for his own personal use. 

6. $90 of the general expenses related to an amount paid out of the business bank account for one of Logan's private expenses. In his attempt to correct the accounts, Logan made another debit entry of $90 in the General Expenses account, with no other entry being made.

Required 

(a) Prepare journal entries to correct errors 1 to 6 (narratives are not required). 

(b) Prepare the Suspense account to show the correcting entries. 

(c) Prepare a corrected trial balance at 31 March 2004. The net profit per the draft accounts, prepared before the above errors were corrected, was $25 000. 

(d) Prepare a statement of corrected net profit showing the effect of each error on the net profit per the draft accounts.

Transcribed Image Text:

Sales Purchases Sales returns Purchase returns Opening stock Debtors Control Creditors Control Discount allowed Discount received Wages and salaries Advertising General expenses Bank Premises Motor vehicles Equipment Capital Drawings Suspense n 33 000 260 Sav 6.900 14 125 700 20 600 1 000 2 340 13 710 70 000 5 000 3 500 3 000 174 135 $ 131 940 315 16 070 614 25 000 196 174 135