As a follow-up to the discussion question from week 2, the following errors were reported by Claude Sample Sports Clinic during the month: 1. An invoice for consultancy service provided to Running Track Club for $25,000 was left in a desk drawer unnoticed and had been omitted completely from the books. The records showed that a cash receipt for $15,000 was issued relating to this transaction while the balance was on account. The company records its consultancy fees in service revenue account. 2. Purchase of medical supplies on February 3 was for $18,000 and not $1,800 as previously incorrectly reported. 3. On Feb 1 the $55,000 invested by Sample ought to have been allocated $45,000 bank account and $10,000 office equipment based on confirmation from the owner that the previous info provided was incorrectly stated. 4. Drawings of $1,000 were not recorded. 5. An electricity bill for $5,000 paid by cash was placed in a desk drawer and not presented with the first set of transactions. The company records its electricity charges in the utility expense account. Required: i. Record the journal entries necessary to correct each of the errors mentioned above. Narrations are not required ii. Update the accounts and prepare the company’s Trial Balance based on both sets of information provided. iii. Prepare the following for the month of February 2015: 1. Income statement 2. Statement of owner’s equity 3. Balance Sheet
As a follow-up to the discussion question from week 2, the following errors were
reported by Claude Sample Sports Clinic during the month:
1. An invoice for consultancy service provided to Running Track Club for $25,000 was
left in a desk drawer unnoticed and had been omitted completely from the books.
The records showed that a cash receipt for $15,000 was issued relating to this
transaction while the balance was on account. The company records its consultancy
fees in service revenue account.
2. Purchase of medical supplies on February 3 was for $18,000 and not $1,800 as
previously incorrectly reported.
3. On Feb 1 the $55,000 invested by Sample ought to have been allocated $45,000
bank account and $10,000 office equipment based on confirmation from the owner
that the previous info provided was incorrectly stated.
4. Drawings of $1,000 were not recorded.
5. An electricity bill for $5,000 paid by cash was placed in a desk drawer and not
presented with the first set of transactions. The company records its electricity
charges in the utility expense account.
Required:
i. Record the
above. Narrations are not required
ii. Update the accounts and prepare the company’s
sets of information provided.
iii. Prepare the following for the month of February 2015:
1. Income statement
2. Statement of owner’s equity
3.
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