Errors and Suspense Account

Asia is a trader. She prepared her trial balance at 31 August 2023. The credit side totalled $273 more than the
debit side. Asia placed the difference in a suspense account.

Asia later discovered the following errors.

1 A credit purchase, $112, from Jacques, had been entered twice in the purchases journal.

2 The wages account had been overcast by $300.

3 Cash received, $75, from Savanah, a trade receivable, had only been entered in the cash book.

4 The total of the sales returns journal for August 2023 of $198, had been credited to both the sales returns
account and the purchases returns account.

5 A payment to Sophie, $93, had been recorded as $39 in Sophie’s account.

REQUIRED

Dr Jacq 112 Dr Soph 54

Cr Purchase 112 Cr Sus 54

Dr Suspense

Cr Wages

Dr Cash

Cr Svaanah

Dr Suspense

Cr Savanah

Dr Sales R 198

Dr Purchase Return 198

Cr Suspense 396
(a) Prepare the journal entries to correct errors 1–5. Narratives are not required.
Asia
Journal

Error Details Debit Credit

number $ $
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[11]
 (b) Prepare the suspense account, including the original difference on the trial balance

Asia
Suspense account

Date Details $ Date Details $

.......... ........Wages................................. .............. .......... ......................................... ..............

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[5]

3 Eshe is a trader. She has prepared a trial balance at 31 March 2023. The totals did not agree
and the difference was placed in a suspense account.

Eshe later discovered the errors shown in the following table.

REQUIRED

(a) Complete the table to show the entries required to correct each error. The first one has been
completed as an example.

Entries required to correct the error

Error Debit Credit

Account $ Account $

Rent paid 300 Insurance 300

A payment for rent, $300, had been
debited to the insurance account.

................... ............ ................... ............

Credit sales to Raymond of $105
had been debited to the sales ................... ............ ................... ............
account and credited to Raymond’s
account.

................... ............ ................... ............

Eshe’s total drawings from the bank
for her own use, $9500, had been
................... ............ ................... ............
debited to the cash account.

................... ............ ................... ............

A purchases invoice from Danika for
$137 had been recorded in her
account and in the purchases journal ................... ............ ................... ............
as $173.

Returns inwards, $44, had not been ................... ............ ................... ............
recorded in the returns inwards
account. ................... ............ ................... ............

The motor expenses account had ................... ............ ................... ............

been overcast by $100.
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[10]

(b) Prepare the suspense account. Include the balancing figure as the original difference on the trial
balance.

Eshe
 Suspense account
Date Details $ Date Details $

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[3]

Eshe’s capital at 1 April 2022 was $31 000. Her draft profit for the year ended 31 March 2023
before correction of the errors was $15 600.

REQUIRED

(c) Calculate Eshe’s capital at 31 March 2023 after the errors have been corrected.

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......................................................Opening Capital

+Profit

Less Drawings

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 .......................................................................................................................................... [7]

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

(a) Complete the following table to show the entries required to correct each error. The first one has
been completed as an example.

Entries required to correct the error

Error Debit Credit
Account $ Account $
A payment for rent, $350, had been Rent 350 Wages 350
debited to the wages account. payable

The sales journal for September had

been overcast by $90. ................... .............. ................... ..............
................... .............. ................... ..............

Sales returns, $110, had been

................... .............. ................... ..............
recorded as purchases returns.
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A payment for office expenses, $18,

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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.

[9]
 R
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Suspense account
Date Details $ Date Details $

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[5]

Rachel’s draft profit before the errors were discovered was $18 243.

REQUIRED

(c) Calculate Rachel’s profit for the year ended 30 September 2023 after the errors in the table have been
corrected.

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(d) State why financial statements may still be reliable even if errors are present.

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2 Ramla has calculated her draft profit figure for the year ended 28 February 2023.
Adjustments in Ramla’s ledger accounts have still to be made for the following items.

1 An amount of $99 owed to Ramla by Mai is to be written off as irrecoverable.

2 Fixtures and fittings, $875, were purchased on credit from Padma.

3 A loan repayment, $500, had been incorrectly recorded as loan interest.

4 Rent paid, $350, had been recorded as $530.

5 Drawings, $120, had been debited to the wages account.

REQUIRED

(a) Prepare the journal entries required for items 1–5. Narratives are not required.
 Ramla
Journal
Item Details Debit Credit
number $ $
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[10]
(c) Complete the following table by entering the amount of each adjustment required to
calculate Ramla’s adjusted profit. If an item has no effect on profit, enter zero (0) in the ‘no
effect on profit’ box.

Item Increase in Decrease in No effect on Profit

profit profit profit
$ $ $

Draft profit 11 650

Adjusted profit

[6]
(c) Explain
 (i) how the journal for item 1 complies with the prudence principle.

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(ii) how the journal for item 5 complies with the business entity principle.

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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

(a) Prepare a corrected trial balance at 31 March 2023. Show the remaining difference between the
debit and credit totals as ‘suspense.

Amadi
Corrected Trial Balance at 31 March 2023

Debit Credit
$ $
 Fittings and equipment at cost ..................... .....................
. .
Provision for depreciation of fittings and equipment
..................... .....................
Trade receivables
..................... .....................
Bank overdraft
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Trade payables
..................... .....................
Capital
..................... .....................
Sales
..................... .....................
Purchases
..................... .....................
Discount received
..................... .....................
Returns inwards
..................... .....................
Carriage inwards
..................... .....................
General expenses
..................... .....................
Rent and rates
..................... .....................
Drawings . .

Inventory ..................... .....................

Suspense ..................... .....................

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___________ ___________

___________ ___________
[6]

Amadi then discovered the following errors.

1 The general expenses account had been undercast by $200.

 2 A rent payment, $516, had been posted to the rent and rates account as $615.

3 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

(b) Prepare the suspense account.

Amadi
Suspense account
Date Details $ Date Details $
2023 2023

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[5]

REQUIRED

( c) Prepare the trading section of Amadi’s income statement for the year ended 31 March 2023
 3 Jules is a hairdresser. He bought some new energy-saving hairdrying equipment, $1900, on
credit from YZH Limited on 30 April 2022.

REQUIRED

(a) Prepare the journal entry to record the purchase of these hairdryers. A narrative is
required.

Jules
Journal

Date Details Debit Credit

$ $
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[3]

The new hairdryers will use less electricity than his old ones. There will be an additional
insurance charge for the new hairdryers. The old hairdryers had been fully depreciated so that
their net book value was nil.

REQUIRED

(b) Complete the table by placing a tick (3) to show whether these changes in expenses
increase or decrease the profit.

Expense Increase Decrease

in profit in profit
Heat and light

Depreciation

Insurance

[3]

Jules has discovered the following five errors in his accounting records for the year ended 30 April
2022.
 1 The total for general expenses, $28, in the petty cash book for April 2022 has not been posted
to the general ledger.

2 A direct debit to Isaac, a supplier, $195 had been recorded as $159 in the account for Isaac.

3 A payment by credit transfer for wages, $144, has not been recorded in the accounting
records.
4 The discount received total for January 2022, $38, had been debited to the discount received
account.

5 The account for rent and the account for commission receivable had both been overcast by
$200.

REQUIRED
(c) Prepare the journal entries required to correct these five errors. Narratives are not
required.

Jules
Journal

Error Details Debit Credit

number $ $
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[10]

(d) Prepare the suspense account. Include the original difference on the trial balance as a balancing
figure.

Jules
Suspense account

Date Details $ Date Details $

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[4]
(a) Prepare the suspense account. Include the original difference on the trial balance as a balancing
figure.
 Mosi
Suspense account
Date Details $ Date Details $

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[4]

Mosi’s original draft profit, before correcting the errors, was $39 970.

REQUIRED

(b) Calculate Mosi’s corrected profit for the year ended 30 April 2022.

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