b) While preparing the trial balance, the accountant found out that the amount differs where the credit side more than the debit side. The difference of RM850 then was entered in suspense account and the business proceeds with the preparation of the draft final accounts and these showed a profit of RM20,123. The following errors were consequently found out: Total purchase day book RM6,540 had been posted as RM5,640 in the purchase account. A cash sale of RM 2,000 to Ms Lim was completely omitted from any books. Interest paid RM50 was posted twice to the ledger from cash book. Furniture of RM10,000 for business use had been debited to purchase account. It is company’s policy to provide depreciation. Furniture to be depreciated at the rate 10% per annum using straight line method. Debtors control was shown as RM108,448. However: - Mr Tang’s debt for RM2300 is uncollectable had not yet written off. - The previous provision for doubtful debts was RM1,800. The company decided to adjust provision for doubtful debts to 2% of debtors control at the end of the year. Required: (i) Journal entries to correct the above events. (ii) Prepare suspense account. (iii) Prepare statement of corrected net profit.
(b) While preparing the
The following errors were consequently found out:
Total purchase day book RM6,540 had been posted as RM5,640 in the purchase account.
A cash sale of RM 2,000 to Ms Lim was completely omitted from any books.
Interest paid RM50 was posted twice to the ledger from
Furniture of RM10,000 for business use had been debited to purchase account. It is company’s policy to provide depreciation. Furniture to be
Debtors control was shown as RM108,448. However:
- Mr Tang’s debt for RM2300 is uncollectable had not yet written off.
- The previous provision for doubtful debts was RM1,800. The company decided to adjust provision for doubtful debts to 2% of debtors control at the end of the year.
Required:
(i)
(ii) Prepare suspense account.
(iii) Prepare statement of corrected net profit.
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