UNIT 22

THE TRIAL BALANCE AND THE CORRECTION OF ERRORS

Question 1

Error Type of error

1 An invoice received from a supplier for $657 was recorded in the Error of original
purchases day book as being for $567 entry
2 A sales return for $89 from a trade receivable, S McNee, was Error of
credited to the account of S McKoy. commission
3 Cash sales of $820 were recorded in the accounts as Dr Cash Compensating error
$820 Cr Sales $800; the total of the travel expenses analysis
column in the petty cash book was mis-totalled at $30 rather the
correct figure of $50.
4 A cheque counterfoil for rent $680 was entirely overlooked Error of omission
5 The purchase of some new office equipment $2300 was debited to Error of principle
the purchases account.
6 The entries made for the payment of a trade payable, L Error of complete
Mohammed, by cheque $320 were: Dr Bank $320, Cr L reversal
Mohammed $320

Question 2 (identifying errors not revealed by a trial balance)

Error Type of error

1 A till roll showed that cash sales had totalled $2320. The entries Error of original
in the accounts were Dr Cash $2230 and Cr Sales $2230. entry
2 A petty cash voucher for stationery $18 was mislaid. Error of omission
3 Discounts allowed of $28 were debited to the trade receivable Error of complete
account and credited to the discounts allowed account. reversal
4 The payment of interest $110 was debited to the insurance Error of
account commission
5 The payment of vehicle running costs, $80, had been debited to Error of principle
the motor vehicles account
6 The sales returns journal was mis-totalled at $170 instead of $160. Compensating error
Rent received from a tenant of $380 had been entered in the rent
received account as $390.

Question 3

JOURNAL
$ $
a Purchases 90
Trade payable 90
To correct amount recorded for a
purchases invoice
b Trade receivable: S McKoy 89
Trade receivable: S McNee 89
To correct sales returns posted to the
wrong account
c Travel expenses 20
Sales 20
To correct errors in posting cash sales
and posting travel expenses
 d Rent 680
Bank 680
To correct omission of entries for the
payment of rent
e Office equipment 2 300
Purchases 2300
To correct the incorrect posting of the
purchase of office equipment
f Trade payable: L Mohammed 640
Bank 640
To correct the reversal of entries made
for the payment of a credit supplier

Question 4

JOURNAL
$ $
a Cash 90
Sales 90
To correct the amount recorded for cash
sales
b Stationery 18
Petty cash 18
To correct the omission of the payment
of stationery
c Discounts allowed 56
Trade receivables 56
To correct the incorrect entries made for
discounts allowed
d Interest 110
Insurance 110
To correct the misposting of the payment
of interest
e Vehicle running costs 80
Motor vehicles 80
To correct the misposting of the payment
of vehicle running costs
f Rent received 10
Sales returns 10
To correct the mis-totalling of sales
returns and the incorrect posting of rent
received
Question 5

JOURNAL
$ $
1 Suspense 400
Sales 400
Correction of misposted sales

2 Purchases 700
Suspense 700
Correction of failure to post total of
purchases journal
3 Suspense 1 700
Rent received 1 700
Correction of failure to post rent received

Dr Suspense account Cr
Sales 400 Difference in TB 1 400
Rent received 1 700 Purchases 700
2 100 2 100

Question 6

JOURNAL
$ $
1 Suspense 720
Discounts received 720
Correction of failure to post total
discounts received
2 Sales returns 90
Suspense 90
Correction of undercast sales returns

3 Suspense 230
Wages 230
Correction of misposted wages

Dr Suspense account Cr
Discounts received 720 Difference in TB 860
Wages 230 Sales returns 90
950 950
Question 7

JOURNAL
$ $
1 Trade receivable 270
Suspense 270
Correction of misposted receipt

2 Postage 70
Suspense 70
Correction of failure to post petty cash
total
3 Suspense 380
Purchases returns 380
Correction of undercast purchases
returns

Dr Suspense account Cr
Purchases returns 380 Difference in TB 40
Trade receivable 270
Postage 70
380 380

Question 8

JOURNAL
$ $
1 Sales 410
Suspense 410
Correction of overcast sales journal

2 Rent 730
Suspense 730
Correction of failure to post rent payment

3 Discounts allowed 10
Suspense 10
Correction of misposted discounts

Dr Suspense account Cr
Difference in TB 1 150 Sales 410
Rent 730
Discounts allowed 10
1 150 1 150
Question 9

(a) Errors not affecting agreement of trial balance totals: 1, 4, 6

Errors affecting agreement of trial balance totals: 2, 3,5

(b)
JOURNAL
$ $
1 Joseph Wright 370
Joshua Wright 370
Correction of error of misposting of sales
returns
2 Suspense 830
T Patel 830
Correction of failure to post receipt from
trade receivable
3 General expenses 40
Suspense 40
Correction of failure to post petty cash
expenditure
4 Bank 90
JK Samson 90
Correction of incorrect amount recorded
for the payment of a supplier
5 Suspense 680
Purchases returns 680
Correction of failure to post purchases
returns total
6 Insurance 700
Bank 700
To correct the reversal of entries made
For the payment of insurance

(c)
Dr Suspense account Cr
T Mungroo 830 Difference in TB 1 470
Purchases returns 680 General expenses 40
1 510 1 510
Question 10

(a) Errors revealed by the trial balance: 1, 2, 4, 5

Errors not revealed by the trial balance: 3, 6
(b)
JOURNAL
$ $
Discounts received 300
Suspense 300
Correction of posting of overcast
discounts received column
Trade receivable: Steven Taylor 830
Suspense 830
Correction of entry not posted from sales
day book
Stationery 40
Cash 40
Correction of error of omission of
payment for stationery
Suspense 270
Sales returns 270
Correction of misposted total from sales
returns journal
Water charges 340
Suspense 340
Correction of entry not posted from cash
book
Cash 1 380
Sales 1 380
Correction of reversal of entries for cash
sales

(c)
Dr Suspense account Cr
Difference in TB 1 200 Discounts received 300
Sakes returns 270 Steven Taylor 830
Water charges 340
1 470 1 470
Question 11
Sharon Lee
Correction of Draft Profit for the year ended 30 November 2012

Increases Decreases $
in draft in draft
profit profit
Draft profit 89 500
1 Correction of omission of depreciation (3 000)
2 Correction of understated purchases (400)
3 Correction of mis-balanced loan account no effect no effect
4 Correction of omission of wages accrual (450)
5 Correction of wrongly recorded carriage no effect no effect
6 Correction of incorrectly treated rent (9 400)
7 Correction of omission of returns inwards (3 280)
Totals (16 530)
Corrected profit 72 970

Question 12
Zero Stores
Correction of Draft Profit for the year ended 30 September 2012

Increases Decreases $
in draft in draft
profit profit
Draft profit 132 850
1 Correction of omission of general expenses (2 140)
2 Correction of understated depreciation (3 700)
3 Correction of overstated sales (710)
4 Correction of misbalanced trade receivable no effect no effect
5 Correction of wrongly treated discounts no effect no effect
6 Correction of rent accrual omitted (630)
7 Correction of overstated returns outwards (300)
Totals (7 480)
Corrected profit 125 370
 
 
Question 13

Balance Sheet at 31 December 2012

$ $ $
Cost Accumulated Net
Depreciation
Non-current assets 470 000 110 000 360 000
Current assets
Inventories 31 000
Trade receivables 18 000
Prepayments 4 000
Cash at bank 7 000
60 000
less Current liabilities
Trade payables 16 000
Accruals 3 000
(19 000)
Net current assets 41 000
401 000
Capital
Opening balance 362 000
Add profit 65 000
427 000
Less drawings (26 000)
401 000
401 000

Note: profit has been recalculated as follows: draft profit $53 000 add back
depreciation error $10 000, add back prepaid expenses $4000, deduct reduction in
the value of inventory $2000 = $65 000.
Question 14

Balance Sheet at 31 July 2012

$ $ $
Cost Accumulated Net
Depreciation
Non-current assets 145 000 57 000 88 000
Current assets
Inventories 16 000
Trade receivables 18 000
Prepayments 2 000
36 000
less Current liabilities
Trade payables 11 000
Accruals 1 000
Bank overdraft 3 000
(15 000)
Net current assets 21 000
109 000
Capital
Opening balance 137 000
Less loss (8 000)
129 000
Less drawings (20 000)
109 000
109 000

Note: the draft profit has been recalculated as follows: drft profit $24 000 less
depreciation omitted $29 000, less accrual omitted $000, less bad debt $2000 = a
loss of $8000.
PREPARING FOR THE EXAMINATION

Q Ans Q Ans Q Ans Q Ans Q Ans

15 D 16 B 17 D 18 B 19 D
20 D 21 B 22 D

Question 23

(a)
JOURNAL
$ $
Drawings 120
Cash 120
Correction of omission of cash drawings
Insurance 830
Suspense 830
Correction of omission of entry for
payment of insurance
Purchases 600
Suspense 600
Correction of crediting of purchases to
the purchases account

(b)

Dr Suspense account Cr
Difference in TB 1 430 Insurance 830
Purchases 600
1 430 1 430

(c)
Morag
Correction of Draft Profit for the year ended 31 October 2012

Increases Decreases $
in draft in draft
profit profit
Draft profit 16 380
1 Correction of omission of insurance (830)
2 Correction of understated purchases (600)
Totals (1 430)
Corrected profit 14 950