Accounting Test Question COE No 1 On Correction Of Errors

Question:

Mr. A extracted a Trial Balance at 31 st December 2005 and found that it did not balance. He posted the difference to a Suspense Account. Later he found the following errors which accounted for the difference:

1. The total of $365 for Discount Allowed for the month of July’05 had been posted to the credit side of Discount Received Account.
2. A payment of $ 210 to Mr A from a debtor Mr XY had been posted to the credit of Mr TEY in error.
3. Mr A had paid $ 2,640 wages and supplied materials costing $960 to his own employees in building a store at the rear of his factory. No adjustment had been made.
4. A payment of $56 for Postage had been posted to that account as $65
5. Mr A bought new fitting for his factory costing $1,800 but this transaction had been posted to the Purchases Account
6. A payment of $96 for an electricity bill had been entered in the Cash Book but the double entry had not been made.

Required:

(a) Prepare the journal entries necessary to correct the errors and omission (19 marks)

(b) Prepare the Suspense Account showing the original difference in the Trial Balance ( 6 marks )

[ Refer Answer ]