On 31 December 2001, an inexperienced bookkeeper working for Wanji, a sole trader

extracted a trial balance. Due to errors committed by the bookkeeper, the trial balance

failed to balance by Sh 369,400. He placed the difference in a suspense account as

shown below:

Wanji trial balance as at 31 December 2001

Sh Sh

Fixed assets - cost 832,000

Stocks:

1 January 2001 148,000

31 December 2001 98,800

Trade debtors 76,000

Prepayments 10,000

Trade creditors 34,600

Bank overdraft 15,200

Accruals 16,000

Drawings 359,600

Capital 1,054,000

Sales 1,043,200

Provision for depreciation 166,400

Purchases 733,000

Operating expenses 126,000

Provision for doubtful debts 3,800

Discounts received 5,000

Discounts allowed 5,800

Suspense account ________ 369,400

2,548,400 2,548,400

Investigations carried out after preparing the above trial balance detected the following

errors:

1. The total of the sales daybook for December 2001 was overcast by Sh 25,700.

2. On July 2001, the business purchased office equipment for Sh 40,000. These were

debited to purchases account. Depreciation on the equipment is at the rate of 10%

per annum on cost and based on the period (months) of usage in the year.

3. A payment to a creditor by cheque of Sh. 8,500 was erroneously credited to the

creditor's account.

4. A payment of Sh. 4,500 for telephone expenses was debited to telephone account as

Sh 5,400.

5. An amount of Sh 15,000 received from a debtor was not posted to the debtor's

account from the cashbook.

6. Purchases daybook for October 2001 was under cast by Sh 28,000.

Assume the business had reported a net profit of Sh 85,800 before adjusting for the above

errors.

Required:

(a) The adjusted trial balance and the correct balance of the suspense account.(b) Journal entries to correct the errors (Narrations not required)

Suspense account starting with the balance determined in the adjusted trial

balance in (a) above.

Answer rating: 100% (QA)

a Adjusted trial balance Wanji adjusted trial balance as at 31 December 2001 Dr Cr Fixed asse... View the full answer