The draft financial statements of Collin Drake have identified the gross profit and net profit for the

Question:

The draft financial statements of Collin Drake have identified the gross profit and net profit for the year ended 30 April 2012 as £976,800 and £172,400 respectively. Thereafter the following errors were detected:

(a) A sale invoiced to Sue Robert at £14,200 was recorded in the Sales Journal as £12,400.

(b) A purchase invoice of £16,450 from Tex Bros was omitted from the Purchases Journal.

(c) An invoice of £400, again from Tex Bros, but this time for stationery, was listed in the Purchases Journal.

(d) £11,500 received in respect of a debt written off in the previous year was credited to the Sales account.

(e) £16,000 paid on 1 August 2011 for office equipment was posted to the Stationery account. Such equipment is usually depreciated at 10% per annum on the straight-line method.

(f) Included in the Rent and rates account is £2,000 paid as property tax on Collin’s private residence.


Required: 

Identify the impact the correction of errors would have on the gross profit and net profit for the year.

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Related Book For  answer-question

Financial Accounting An Introduction

ISBN: 9780273737650

2nd Edition

Authors: Mr Barry Elliott, Mr Augustine Benedict

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