Question nineteen: At the end of a financial year, the trial balance of a small company failed to agree and the difference was entered in a suspense account. Subsequently, the following errors were discovered: (i) The sales day book had been undercast by shs. 10. (ii) A customer's personal account has been correctly credited with shs.2 discount, but no corresponding entry was made in the discount column of the cash book. (iii) Discounts allowed for July, amounting to shs.70 were credited instead of being debited to the discount account. (iv) A debit balance on the account of D Bird, a customer, was carried forward shs. 10 short. (v) An old credit balance of shs.3 on a customer's account (J Flyn) had been entirely overlooked when extracting the balances. Required: (a) Prepare, where necessary, the journal entries to correct the errors. (b) Draw up a statement showing the impact of these errors upon the trial balance.

Question nineteen: At the end of a financial year, the trial balance of a small company failed to agree and the difference was entered in a suspense account. Subsequently, the following errors were discovered: (i) The sales day book had been undercast by shs. 10. (ii) A customer's personal account has been correctly credited with shs.2 discount, but no corresponding entry was made in the discount column of the cash book. (iii) Discounts allowed for July, amounting to shs.70 were credited instead of being debited to the discount account. (iv) A debit balance on the account of D Bird, a customer, was carried forward shs. 10 short. (v) An old credit balance of shs.3 on a customer's account (J Flyn) had been entirely overlooked when extracting the balances. Required: (a) Prepare, where necessary, the journal entries to correct the errors. (b) Draw up a statement showing the impact of these errors upon the trial balance.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The total of a list of balances in Patricia Co’s receivables ledger was $643,700 on 30 September 20X9. This did not agree with the balance on Patricia Co’s receivables ledger control account. The following errors were discovered: (i) A credit balance on an individual customer’s account of $400 was incorrectly extracted as a debit balance (ii) An invoice for $3,553 was posted to the customer account as £3,535 (iii) The total of the sales returns day book was overcast by $600 What amount should be shown in Patricia Co’s statement of financial position for accounts receivable at 30 September 20X9? A. $642,918 B. $642,882 C. $644,482 D. $643,418
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An auditor's analytical procedures have revealed that the accounts receivable of a client have doubled since the end of the prior year. However, the allowance for doubtful accounts, as a percentage of accounts receivable remained about the same. Which of the following client explanations most likely would satisfy the auditor? a. Credit standards were liberalized in the current year. b. Twice as many accounts receivable were written off in the prior year as compared to this year. c. A greater percentage of accounts were currently listed in the "more than 90 days overdue" category than in the prior year. d. The client opened a second retail outlet in the current year and its credit sales approximately equaled the older, established outlet.
AUDIT OF RECEIVABLE ACCOUNTS AND ALLOWANCE FOR DOUBTFUL ACCOUNTS The company's policy is to allow for dubious accounts as follows: Less than three months P2,500,960 one percent 843,200 5% in 3 to 6 months Over a 6-month period, 274,500 10% P3,618,660 in total An examination of the accounts receivable schedule revealed that certain accounts that had been overdue for more than a year and totaled P152,460 should be wiped off. 4. Accounts payable A. P3,936,000 B. P3,618,660 C. P3,783,540 D. P3,613, 140
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