At the end of the year on 31 March 2024, Natalie drew up her trial balance. The totals did not match, so she opened a suspense account. The debit total was $357 more than the credit total.
Natalie then uncovered these errors:
1 A bank transfer, $420, received from a credit customer Sarah had been entered correctly in the bank account, but no double-entry posting had been made.
2 Natalie introduced a personal vehicle into the business, valued at $7000. This had been debited to the capital account and credited to the vehicle maintenance account.
3 Purchases of $270 had been posted correctly to the suppliers account, but only $207 had been debited to the purchases account.
4 No entry had been recorded for general expenses, $126, paid by bank transfer.
5 Cash drawings of $200 had been debited to the cash account and credited to the drawings account.
(a)[10]
Prepare the journal entries needed to correct errors 1 to 5. Narratives are unnecessary.
(b)[3]
Prepare the suspense account as at 31 March 2024.
(c)[2]
Complete the table by stating the type of error that occurred in errors 4 and 5.
(d)[5]
Complete the table below by putting a tick (✓) in the correct column to show the effect on the profit for the year after each error has been corrected.
Worked solution & mark scheme
This 20-mark question has a full step-by-step worked solution and mark scheme.