Sunita has drawn up a trial balance at 31 December 2023 and a draft income statement for the year ended 31 December 2023.
Sunita then found the following errors.
1 The total of the sales returns journal for November 2023, $3 524, had been entered on the credit side of the purchases account.
2 The purchases journal for July 2023 had been understated by $90.
3 The total of the sales journal for May 2023, $19 415, had not been transferred to the sales account.
4 A receipt from P. Mattel, $129, had been debited to the account for M. Patel.
5 Capital introduced by Sunita, $5 000, had been entered in the bank account on the debit side but no further entry had been made.
6 A rent payment of $500 had been posted to the rent expense account as $50.
Sunita’s gross margin is 40%.
(a)[4]
Prepare the journal entry to correct error 1 only. A narrative is needed.
(b)[7]
Prepare the suspense account. Show the balancing figure as the original difference on the trial balance.
(c(i))[4]
Calculate the corrected gross profit amounts in the table.
(c(ii))[3]
Calculate the corrected profit for the year in the table.
(d)[2]
Calculate Sunita’s sales revenue for the year ending 31 December 2023.
Worked solution & mark scheme
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