Amadi drew up the trial balance below, which has not yet been totalled and still contains errors.
Trial balance at 31 March 2023
Fittings and equipment at cost $30000 credit
Provision for depreciation of fittings and equipment $7500 debit
Trade receivables $6100
Bank overdraft $3106
Trade payables $3485
Capital $20000
Sales $73250
Purchases $41785
Discount received $1990
Returns inwards $3390
Carriage inwards $1223
General expenses $6430
Rent and rates $7380
Drawings $9500
Inventory at 1 April 2022 $3752 credit
Inventory at 31 March 2023 $3965
(a)[6]
Prepare the corrected trial balance at 31 March 2023. Show the difference left between the debit total and the credit total as ‘suspense’.
(b)[5]
Prepare the suspense account for these errors.
(c)[4]
For the year ended 31 March 2023, Prepare the trading section of Amadi’s income statement.
(d)[2]
Calculate Amadi’s gross margin and state it correct to two decimal places.
(e)[3]
Explain whether Amadi ought to be satisfied with these results.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme.