Accounting Test Question No.COE No.2 On Correction Of Errors/Suspense Account

September 22nd, 2008 Comments off
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Append below an accounting test question No COE No. 2 on Correction of Errors/Suspense account:

Accounting Question Test COE No.2 On Correction Of Errors/Suspense Account


When the trial balance of XYZ Ltd as at 30/9/08 was prepared, a difference was found. A Suspense Account was created in order to achieve the balance:

Examination of the books showed the following:

1.0  Discount allowed of $76 had been credited to the Discount Received Account

2.0  A sale of $151 to Mr. A had been posted correctly to the personal account but entered in the Sales Day Book as $115

3.0  A cheque received from Mr. B entered correctly in the Cash Book as $766 had been posted to the company’s account as $760

4.0  The purchase of new machinery for $1,200 had been posted to the Stock Account. Depreciation is ignored for the year in which the machinery is purchased

5.0  A sale of $265 to Mr. C had not been posted to his account

6.0  A petty cash balance of $100 was omitted from Trial Balance

7.0  Bank interest charges of $720 were correctly entered in the Cash Boo but the other side of the double entry had been omitted.


(a)  Prepare Journal entries to correct the above errors, without narrations (14 marks)

(b)  Prepare a Suspense Account (7 marks)

(c)  Final accounts, prepared from the original trial balance, show the working capital to be $16,217. Prepare a statement showing the effect of the above correction of this figure ( 4 marks)

[ Refer ANSWER)


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Financial Accounting


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