A company’s draft financial statements for 2021 showed a profit of $630,000. However, the trial balance did not agree, and a suspense account appeared in the company’s financial statements. Subsequent checking revealed the following errors: 1 The cost of an item of plant $48,000 had been entered in the cash book and in the plant account as $4,800. 2 Bank charges of $440 appeared in the bank statement in December 2021 but had not been entered in the company’s records. 3 One of the directors paid $800 due to a supplier in the company’s payables ledger by a personal cheque. The bookkeeper recorded a debit in the supplier’s ledger account but did not complete the double entry for the transaction. 4 The payments side of the cash book had been understated by $10,000. Which of the above items would require an entry to the suspense account in correcting them? What would the company’s profit become after the correction of the above errors?
A company’s draft financial statements for 2021 showed a profit of $630,000. However, the
Subsequent checking revealed the following errors:
1 The cost of an item of plant $48,000 had been entered in the
2 Bank charges of $440 appeared in the bank statement in December 2021 but had not been entered in the company’s records.
3 One of the directors paid $800 due to a supplier in the company’s payables ledger by a personal cheque. The bookkeeper recorded a debit in the supplier’s ledger account but did not complete the double entry for the transaction.
4 The payments side of the cash book had been understated by $10,000.
Which of the above items would require an entry to the suspense account in correcting them?
What would the company’s profit become after the correction of the above errors?
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