Q1.
The
trial balance of Mr. W & H failed to agree and the difference Rs.20,570 was
put into suspense pending investigation which disclosed that:
(i) Purchase returns day
book had been correctly entered and totalled at Rs.6,160, but had been posted
to the ledger.
(ii) Discounts received
Rs.1,320 had been debited to discounts allowed.
(iii) The Sales account
had been under added by Rs.10,000.
(iv) A credit sale of
Rs.1,470 had been debited to a customer account at Rs.1,740.
(v) A vehicle bought
originally for Rs.7,000 four years ago and depreciated to Rs.1,200 had not been
sold for Rs.1,500 in the beginning of the year but no entries, other than in
the bank account had been passed through the books.
(vi) An accrual of
Rs.560 for telephone charges had been completely omitted.
(vii) A bad debt of
Rs.1,560 had not been written off and provision for doubtful debts should
have been maintained at 10% of Trade receivables which are shown in the trial
balance at Rs.23,390 with a credit provision for bad debts at Rs.2,320.
(viii) Tools bought for
Rs.1,200 had been inadvertently debited to purchases.
(ix) The
proprietor had withdrawn, for personal use, goods worth Rs.1,960. No entries
had been made in the books
Required:
(i) Pass rectification
entries without narration to correct the above errors before preparing annual
accounts.
(ii) Prepare a statement
showing effect of rectification on the reported net profit before correction of
these errors.
see in detail
Q2.
On going through the
Trial balance of Ball Bearings Co. Ltd. you find that the debit is in excess by
Rs.150. This was credited to Suspense Account .On a close scrutiny of
the books the following mistakes were noticed
(1) The totals of debit
side of Expenses Account have been cast in excess by Rs.50.
(2) The Sales
Account has been totalled in short by Rs.100
(3) One item of purchase
of Rs.25 has been posted from the day book ledger as Rs. 250.
(4) The sale return of
Rs.100 from a party has not been posted to that account though the Party s
account has been credited
(5) A cheque of Rs.500
issued to the Suppliers account (shown under Trade payables) towards his
dues has been wrongly debited to the purchases
(6) A credit sale of
Rs.50 has been credited to the sales and also to the trade receivable account.
You are required to
(i) Pass necessary
journal entries for correcting the above
(ii) Show how they
affect the Profits; and
(iii) Prepare the
Suspense Account as it would appear in the ledger
see in detail
Q5.
[Errors affecting accounts located before the preparation of trial balance]
Pass necessary journal entries to rectify the
following errors.
1)
Sales
return book was overcast by Rs.500.
2)
Factory
lighting bill Rs.9,000 paid but recorded twice in the books.
3)
Paid
rent Rs.725 was wrongly posted to rent account as Rs.275.
4)
Total
of Sales Book was undercast by Rs.850.
5)
Wages
paid for extension of building Rs.8,900 was charged to wages account.
6)
Cash
received from Moni was recorded on the payment side of cash book Rs.1,800.
7)
Paid
carriage for purchase of Machinery Rs.3,100 was charged to carriage account.
8)
Life
Insurance premium of proprietor paid Rs.1,650.
see in detail
