Akil completed a trial balance on 29 February 2024. The debit column totalled $83 640, while the credit column totalled $84 025.
He then found these errors:
1. The January 2024 sales journal total, $3416, had been entered in the sales returns account on the credit side.
2. An insurance direct debit of $115 had been credited to both the bank account and the insurance account.
3. Discount allowed, $47, was credited to discount received.
4. A payment for office equipment of $52 was debited to stationery.
5. The February purchases journal had been overcast by $90.
Before the errors were corrected, Akil’s draft profit for the year was $17 420.
(a(i))[1]
State which business document indicates when the direct debit for insurance was paid.
(a(ii))[1]
State which of errors 1 to 5 above counts as an error of principle.
(b)[7]
Prepare the journal entries needed to correct errors 1 to 3 only. Narratives do not need to be included.
(c(i))[1]
State why a balance might still be left on the suspense account once errors 1 to 5 have been corrected.
(c(ii))[5]
Prepare the suspense account. Bring down any balance still remaining at 1 March 2024.
(d)[5]
Calculate Akil’s profit once items 1 to 5 have been corrected.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme. One marking point: “bank statement” …