GFM OVERCOME SUPP EXAM- REVISION
1. Chichi Fashions Ltd is an old-fashioned firm with a hand-written set of books. A trial
balance is extracted at the end of each month, and a profit & loss account and balance sheet
are computed. This month, however, the trial balance will not balance, because the credits
exceed the debits by TAS. 1,536.
After inspection of the ledgers you discover the following errors:
i] A balance of TAS. 87 on a debtor’s account has been omitted from the schedule of
debtors, the total of which has been entered as debtors on the trial balance.
ii] A small piece of machinery purchased for TAS. 1,200 has been written off to repairs.
iii] The receipts side of the cash book has been undercast by TAS. 720.
iv] The total of one page of the sales daybook has been carried forward as TAS. 8,154,
whereas the correct amount is TAS. 8,514.
v] A credit note for TAS. 179 received from a supplier has been posted to the wrong side of
his account.
vi] An electricity bill to the sum of TAS. 152, not yet accrued for, is discovered in a filing
cabinet.
vii] Sr. JD Outfitters has paid TAS. 731 to clear its account. Its account has been credited but
the cheque has not yet passed through the cash book.
Required:
Write up the suspense account to clear the difference.
2. Show the journal entries necessary to correct the following errors:
(a) A sale of goods £412 to T More had been entered in T Mone’s account.
(b) The purchase of a machine on credit from J Frank for £619 had been completely omitted from
our books.
(c) The purchase of a computer for £550 had been entered in error in the Office Expenses
account.
(d) A sale of £120 to B Wood had been entered in the books, both debit and credit, as £102.
(e) Commission received £164 had been entered in error in the Sales account.
(f ) A receipt of cash from T Blair £68 had been entered on the credit side of the cash book and
the debit side of T Blair’s account.
(g) A purchase of goods £372 had been entered in error on the debit side of the Drawings
account.
(h) Discounts Allowed £48 had been entered in error on the debit side of the Discounts Received
account.
3. Show the journal entries needed to correct the following errors:
(a) Purchases £1,410 on credit from A Ray had been entered in B Roy’s account.
(b) A cheque of £94 paid for printing had been entered in the cash column of the cash book
instead of in the bank column.
(c) Sale of goods £734 on credit to D Rolls had been entered in error in D Rollo’s account.
(d) Purchase of goods on credit L Hand £819 entered in the correct accounts in error as £891.
(e) Cash paid to G Boyd £64 entered on the debit side of the cash book and the credit side of
G Boyd’s account.
(f ) A sale of fittings £320 had been entered in the Sales account.
(g) Cash withdrawn from bank £200 had been entered in the cash column on the credit side of
the cash book, and in the bank column on the debit side.
(h) Purchase of goods £1,182 has been entered in error in the Furnishings account.
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4. Give the journal entries needed to record the corrections of the following. Narratives are
not required.
(a) Extra capital of £5,000 paid into the bank had been credited to Sales account.
(b) Goods taken for own use £72 had been debited to Sundry Expenses.
(c) Private rent £191 had been debited to the Rent account.
(d) A purchase of goods from D Pine £246 had been entered in the books as £426.
(e) Cash banked £410 had been credited to the bank column and debited to the cash column in
the cash book.
(f ) Cash drawings of £120 had been credited to the bank column of the cash book.
(g) Returns inwards £195 from G Will had been entered in error in T Young’s account.
(h) A sale of a printer for £100 had been credited to Office Expenses.
5. Journal entries to correct the following are required, but the narratives can be omitted.
(a) Rent Received £430 have been credited to the Commissions Received account.
(b) Bank charges £34 have been debited to the Business Rates account.
(c) Completely omitted from the books is a payment of Motor Expenses by cheque £37.
(d) A purchase of a fax machine £242 has been entered in the Purchases account.
(e) Returns inwards £216 have been entered on the debit side of the Returns Outwards account.
(f ) A loan from G Bain £2,000 has been entered on the credit side of the Capital account.
(g) Loan interest of £400 has been debited to the Van account.
(h) Goods taken for own use £84 have been debited to the Purchases account and credited to
Drawings
5. Your bookkeeper extracted a trial balance on 31 December 20X5 which failed to agree by £210,
a shortage on the credit side of the trial balance. A suspense account was opened for the difference.
In January 20X6 the following errors made in 20X5 were found:
(i) Sales day book had been undercast by £200.
(ii) Sales of £610 to T Vantuira had been debited in error to T Ventura’s account.
(iii) Rent account had been undercast by £90.
(iv) Discounts Allowed account had been overcast by £100.
(v) The sale of a computer at net book value had been credited in error to the Sales account £230.
You are required to:
(a) Show the journal entries necessary to correct the errors.
(b) Draw up the suspense account after the errors described have been corrected.
(c) If the net profit had previously been calculated at £31,400 for the year ending 31 December
20X5, show the calculations of the corrected net profit.
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