3. Verification of accounting records
A section of Accounting, 7707
Listing 10 of 107 questions
Akil prepared his trial balance at 29 February 2024. The total of the debit side was $83 640 and the total of the credit side was $84 025. Akil later discovered the following errors. The total of the sales journal for January 2024, $3416, had been credited to the sales returns account. A direct debit for insurance, $115, had been credited to both the bank account and the insurance account. Discount allowed, $47, had been credited to the account for discount received. A payment for office equipment, $52, had been debited to the stationery account. The purchases journal for February had been overcast by $90. REQUIRED State which business document shows when the direct debit for insurance was paid which of the errors listed in 1 to 5 above is an error of principle Prepare the journal entries to correct errors 1 to 3 only. Narratives are not required. Akil Journal Error number Details Debit $ Credit $ ……… ……… ……… ……… ……… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… ………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… …………………………………………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… ……………… State why a balance may remain on the suspense account after errors 1 to 5 have been corrected. Prepare the suspense account. Bring down any remaining balance at 1 March 2024. Akil Suspense account Date ……… ……… ……… ……… ……… ……… ……… Details ………………………… ………………………… ………………………… ………………………… ………………………… ………………………… ………………………… $ ……… ……… ……… ……… ……… ……… ……… Date ……… ……… ……… ……… ……… ……… Details ………………………… ………………………… ………………………… ………………………… ………………………… ………………………… ………………………. $ ……… ……… ……… ……… ……… ……… ……… Akil’s draft profit for the year, before correction of the errors, was $17 420. REQUIRED Calculate Akil’s profit after items 1 to 5 have been corrected.
7707_s24_qp_22
THEORY
2024
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
107