Samira has been trading for several years and has a debit bank balance. She drew up her trial balance on 31 January 2025. The credit side total was greater than the debit side total. Samira recorded the difference in a suspense account.
Samira later found the following errors:
1 A repair to equipment, $175$, had been debited to the equipment account.
2 A credit transfer, $132$, from David, a trade receivable, had been debited to David’s account and credited to the bank account.
3 A repayment of a bank loan, $2500$, had been debited to bank charges.
4 A bank payment for stationery, $21$, had been recorded as $12$.
5 Sales returns, $40$, had been recorded as purchases returns.
(a)[11]
Prepare the journal entries needed to correct errors 1-5. Narratives are not needed.
(b)[4]
Complete the table to show the effect of each error on profit for the year and on the bank balance. State whether the effect is overstated or understated and by how much. If there is no effect, enter ‘no effect’ in the box.
(c)[3]
Calculate the total of the trial balance once the errors have been corrected.
(d)[2]
State the number of one error from 1-5 that is (i) an error of principle (ii) an error of original entry.
Worked solution & mark scheme
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