Question 2 The Trial Balance of Asanko Enterprise as at 31st October 2021 failed to agree and a difference (a shortfall) of GH¢1,350,000 on the debit side was placed in a Suspense Account, pending the finding of the cause of the disagreement. Further investigations carried out by the accounts officer revealed the following errors; a. Bad debt written off, GH¢169,500 was not recorded in the books at all though management had given approval for their write off. b. Cash Purchases GH¢744,000 was recorded in the cashbook only. c. Salary to Gidigidi GHe 1,356,000 was debited to Telephone expenses account. d. Sales account was overstated on page 200 of the Sales Day Book by GH¢795,000 e. Purchases Account in the general ledger was undercast by GH¢96,000. f. Total cash drawings of GH¢1,080,000 was correctly entered into the cashbook but was duplicated in the Drawings account. g. There was no entry into the Machinery account for the purchase of a machine by cash for GH¢1,350,000. h. Credit sales to Manuela GH¢1,350,000 was debited to sales account and credited to her account in the sales ledger. i. Rent paid GHe 1,200,000 was posted into Utility expenses account. j. Motor van bought from PHC Motors on credit for GH¢450,000 was debited to Motor running expenses account. k. Payments to creditors by cheque GH¢1,560,000 was not recorded in the books at all although the receipts were given to the Accounts Clerk. 1. GH 555,000 cash received from Mr. Anokye, a debtor, recorded in the cashbook, was not posted into his account. You are required to: a. Use Journal Entries to record the correction of the errors b. Write up the Suspense account after the correction of the errors c. Assuming that the Net Profit arrived at on the basis of the old Trial Balance figures was GH 2,587,500, prepare a statement to show the corrected Net Profit for the year ended 31st October 2021.
Question 2 The Trial Balance of Asanko Enterprise as at 31st October 2021 failed to agree and a difference (a shortfall) of GH¢1,350,000 on the debit side was placed in a Suspense Account, pending the finding of the cause of the disagreement. Further investigations carried out by the accounts officer revealed the following errors; a. Bad debt written off, GH¢169,500 was not recorded in the books at all though management had given approval for their write off. b. Cash Purchases GH¢744,000 was recorded in the cashbook only. c. Salary to Gidigidi GHe 1,356,000 was debited to Telephone expenses account. d. Sales account was overstated on page 200 of the Sales Day Book by GH¢795,000 e. Purchases Account in the general ledger was undercast by GH¢96,000. f. Total cash drawings of GH¢1,080,000 was correctly entered into the cashbook but was duplicated in the Drawings account. g. There was no entry into the Machinery account for the purchase of a machine by cash for GH¢1,350,000. h. Credit sales to Manuela GH¢1,350,000 was debited to sales account and credited to her account in the sales ledger. i. Rent paid GHe 1,200,000 was posted into Utility expenses account. j. Motor van bought from PHC Motors on credit for GH¢450,000 was debited to Motor running expenses account. k. Payments to creditors by cheque GH¢1,560,000 was not recorded in the books at all although the receipts were given to the Accounts Clerk. 1. GH 555,000 cash received from Mr. Anokye, a debtor, recorded in the cashbook, was not posted into his account. You are required to: a. Use Journal Entries to record the correction of the errors b. Write up the Suspense account after the correction of the errors c. Assuming that the Net Profit arrived at on the basis of the old Trial Balance figures was GH 2,587,500, prepare a statement to show the corrected Net Profit for the year ended 31st October 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 2
The Trial Balance of Asanko Enterprise as at 31st October 2021 failed to agree and a difference
(a shortfall) of GH¢1,350,000 on the debit side was placed in a Suspense Account, pending the
finding of the cause of the disagreement.
Further investigations carried out by the accounts officer revealed the following errors;
a. Bad debt written off, GH¢169,500 was not recorded in the books at all though
management had given approval for their write off.
b. Cash Purchases GH¢744,000 was recorded in the cashbook only.
c. Salary to Gidigidi GHe 1,356,000 was debited to Telephone expenses account.
d. Sales account was overstated on page 200 of the Sales Day Book by GH¢795,000
e. Purchases Account in the general ledger was undercast by GH¢96,000.
f. Total cash drawings of GH¢1,080,000 was correctly entered into the cashbook but was
duplicated in the Drawings account.
g. There was no entry the Machinery account for the purchase of a machine by cash for
GH¢1,350,000.
h. Credit sales to Manuela GH¢1,350,000 was debited to sales account and credited to her
account in the sales ledger.
i. Rent paid GH¢1,200,000 was posted into Utility expenses account.
j.
Motor van bought from PHC Motors on credit for GH¢450,000 was debited to Motor
running expenses account.
k. Payments to creditors by cheque GH¢1,560,000 was not recorded in the books at all
although the receipts were given to the Accounts Clerk.
1. GH¢555,000 cash received from Mr. Anokye, a debtor, recorded in the cashbook, was
not posted into his account.
You are required to:
a. Use Journal Entries to record the correction of the errors
b. Write up the Suspense account after the correction of the errors
c. Assuming that the Net Profit arrived at on the basis of the old Trial Balance figures was
GH 2,587,500, prepare a statement to show the corrected Net Profit for the year ended
31st October 2021.
2
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1. For the sales account overcast, shouldn't the sales account debited to reduce the amount by the overcast figure?
2. If there wasn't any entry into the Machine account which the cash used to buy the machine was recorded, the accounts going to be machine and suspense?
3. Amount received from Mr Anokye was recorded in the
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