4. At the year-end of T Down & Co, an imbalance in the trialbalance was revealed which resulted in the creation of aасcountwithcreditbalance of $1,040.suspenseInvestigations revealed the following errors.a. A sale of goods on credit for $1,000 had been omitted fromthe sales account.ab. Delivery and installation costs of $240 on a new item ofplant had been recorded as a revenue expense.c. Cash discount of $150 on paying a supplier, JW, had beentaken, even though the payment was made outside the timelimit.d. Inventory of stationery at the end of the period of $240 hadbeen ignored.e. A purchase of raw materials of $350 had been recorded inthe purchases account as $850.f. The purchase returns day book included a sales credit notefor $230 which had been entered correctly in the account ofthe customer concerned, but included with purchase returnsin the nominal ledger.Required(a) Prepare journal entries to correct each of the above errors.Narratives are not required.(b) Open a suspense account and show the corrections to be made.(c) Prior to the discovery of the errors, T Down & Co's gross profitfor the year was calculated at $35,750 and the net profit for theyear at $18,500. Calculate the revised gross and net profit figuresafter the correction of the errors.

Suspense Account is used by a company to rectify the error of mismatched trial balance account. The…

Required (a) Prepare journal entries to correct each of the above errors. Narratives are not required. (b) Open a suspense account and show the corrections to be made. (c) Prior to the discovery of the errors, T Down & Co's gross profit for the year was calculated at $35,750 and the net profit for the year at $18,500. Calculate the revised gross and net profit figures after the correction of the errors.

Required (a) Prepare journal entries to correct each of the above errors. Narratives are not required. (b) Open a suspense account and show the corrections to be made. (c) Prior to the discovery of the errors, T Down & Co's gross profit for the year was calculated at $35,750 and the net profit for the year at $18,500. Calculate the revised gross and net profit figures after the correction of the errors.

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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Question

4. At the year-end of T Down & Co, an imbalance in the trial
balance was revealed which resulted in the creation of a
асcount
with
credit
balance of $1,040.
suspense
Investigations revealed the following errors.
a. A sale of goods on credit for $1,000 had been omitted from
the sales account.
a
b. Delivery and installation costs of $240 on a new item of
plant had been recorded as a revenue expense.
c. Cash discount of $150 on paying a supplier, JW, had been
taken, even though the payment was made outside the time
limit.
d. Inventory of stationery at the end of the period of $240 had
been ignored.
e. A purchase of raw materials of $350 had been recorded in
the purchases account as $850.
f. The purchase returns day book included a sales credit note
for $230 which had been entered correctly in the account of
the customer concerned, but included with purchase returns
in the nominal ledger.
Required
(a) Prepare journal entries to correct each of the above errors.
Narratives are not required.
(b) Open a suspense account and show the corrections to be made.
(c) Prior to the discovery of the errors, T Down & Co's gross profit
for the year was calculated at $35,750 and the net profit for the
year at $18,500. Calculate the revised gross and net profit figures
after the correction of the errors.

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