3.1. The trial balance
A subsection of Accounting, 7707, through 3. Verification of accounting records
Listing 10 of 30 questions
Mosi is a trader. The totals of his trial balance at 30 April 2022 did not agree and the difference was placed in a suspense account. Mosi later discovered the following errors. Commission received, $96, had been debited to the discount received account. The entry to the bank account was correctly made. The total of the sales journal for April 2022, $1258, was transferred to the sales account as $2185. A cheque payment for motor expenses, $77, had been omitted from the book-keeping records. A payment by electronic transfer, $135, was recorded as a payment in the petty cash book. An invoice received from Tracey, $160, was credited to the account for Stacey. REQUIRED Prepare the journal entries to correct errors 1–5. Narratives are not required. Prepare the suspense account. Include the original difference on the trial balance as a balancing figure. Mosi Suspense account Date Details $ Date Details $ Mosi’s original draft profit, before correcting the errors, was $39 970. REQUIRED Calculate Mosi’s corrected profit for the year ended 30 April 2022.
7707_s22_qp_22
THEORY
2022
Paper 2, Variant 2
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Amadi prepared the following trial balance which is not yet totalled and contains errors. Amadi Trial balance at 31 March 2023 Debit Credit $ $ Fittings and equipment at cost 30 000 Provision for depreciation of fittings and equipment 7 500 Trade receivables 6 100 Bank overdraft 3 106 Trade payables 3 485 Capital 20 000 Sales 73 250 Purchases 41 785 Discount received 1 990 Returns inwards 3 390 Carriage inwards 1 223 General expenses 6 430 Rent and rates 7 380 Drawings 9 500 Inventory at 1 April 2022 3 752 Inventory at 31 March 2023 3 965 REQUIRED Prepare a corrected trial balance at 31 March 2023. Show the remaining difference between the debit and credit totals as ‘suspense.’ Amadi then discovered the following errors. The general expenses account had been undercast by $200. A rent payment, $516, had been posted to the rent and rates account as $615. The total for discount received in the cash book for February 2023, $165, had been debited to the drawings account. No other entry for this total had been made. REQUIRED Prepare the suspense account. Amadi Suspense account Date Details $ Date Details $ REQUIRED Prepare the trading section of Amadi’s income statement for the year ended 31 March 2023. Amadi Income Statement (trading section) for the year ended 31 March 2023 $ $ Calculate Amadi’s gross margin, correct to two decimal places. Gross margin workings answer Amadi’s main competitor is Hector who owns his own business premises. Amadi and Hector have similar gross margins but Hector has a slightly higher profit margin. REQUIRED Explain whether or not Amadi should be satisfied with these results.
7707_s23_qp_22
THEORY
2023
Paper 2, Variant 2
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Rachel is a trader. The totals of Rachel’s trial balance prepared on 30 September 2023 did not agree and the difference was placed in a suspense account. Rachel later discovered the errors shown in the following table. REQUIRED Complete the following table to show the entries required to correct each error. The first one has been completed as an example. Error Entries required to correct the error Debit Credit Account $ Account $ A payment for rent, $350, had been debited to the wages account. Rent payable Wages The sales journal for September had been overcast by $90. Sales returns, $110, had been recorded as purchases returns. A payment for office expenses, $18, had been recorded in the office expenses account as $81. A petty cash book payment, $29, to Cole, a supplier, had been recorded in the column for motor expenses. Prepare the suspense account. Include the balancing figure as the original difference on the trial balance. Rachel Suspense account Date Details $ Date Details $ Rachel’s draft profit before the errors were discovered was $18 243. REQUIRED Calculate Rachel’s profit for the year ended 30 September 2023 after the errors in the table have been corrected. State why financial statements may still be reliable even if errors are present.
7707_w23_qp_22
THEORY
2023
Paper 2, Variant 2
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Natalie prepared her trial balance at the end of the year 31 March 2024. The totals did not agree and she had to open a suspense account. The debit side of the trial balance was $357 higher than the credit side. Natalie later discovered the following errors. A bank transfer, $420, received from a credit customer Sarah had been correctly recorded in the bank but no other entry had been made. Natalie contributed a personal vehicle to the business valued at $7000. This had been debited to the capital account and credited to the vehicle maintenance account. Purchases of $270 had been correctly entered in the suppliers account but had been debited as $207 in the purchases account. No entry had been made for general expenses, $126, paid by bank transfer. Cash drawings of $200 had been debited to the cash account and credited to the drawings account. REQUIRED: Prepare the journal entries on page 11 required to correct errors 1 to 5. Narratives are not required. Prepare the suspense account at 31 March 2024. Natalie Suspense Account Date Details $ Date Details $ Complete the table by identifying the type of errors that occurred in errors 4 and 5. Error Number Error type Error 4 Error 5 Complete the table below by placing a tick (3) in the appropriate column to indicate the effect on the profit for the year after correcting each of the errors. Error Number Effect on profit decrease increase no effect Error 1 Error 2 Error 3 Error 4 Error 5
7707_w24_qp_23
THEORY
2024
Paper 2, Variant 3
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Questions Discovered
30