The trial balance of ASEM MPE NIPA Ltd. for the year ended 31st December 2015 failed to agree and the difference of GH¢81,000 was debited to the suspense account. Accounts were prepared on the basis of the trial balance and showed a net profit of GH¢2,000,000. The following errors were subsequently discovered: a. The sales daybook had been overcast by GH¢9,000 b. The discount allowed of GH¢61,200 correctly entered in the sales ledger had been posted to the wrong side of the discount allowed account in the nominal ledger c. Cheques received from Ibrahim a customer amounting to GH¢18,200 was entered correctly in the cash book but has been credited to the personal account as GH¢12,800 d. A credit purchase of GH¢27,000 from Ruth has not been entered on her personal account in the bought ledger. e. A credit note of GH¢12,600 for goods returned by Korkor a customer had been entered twice in the return inward book and credited twice to the personal account of the customer f. A payment of GH¢39,000 on 30th Dec for repairs of motor vehicle had been debited to the motor vehicle account. g. Part of the company’s premises had been let as from 1st December at a monthly rent of GH¢6,000 on 1ST Dec. The tenant paid three months’ rent in advance. This amount had been entered in the cash book but no other entry had been made in any other account. You are required to: a. Write up journal entries to correct the above errors b. Show the suspense account

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
icon
Concept explainers
Question

  The trial balance of ASEM MPE NIPA Ltd. for the year ended 31st December 2015 failed to agree
and the difference of GH¢81,000 was debited to the suspense account. Accounts were prepared on
the basis of the trial balance and showed a net profit of GH¢2,000,000.
The following errors were subsequently discovered:
a. The sales daybook had been overcast by GH¢9,000
b. The discount allowed of GH¢61,200 correctly entered in the sales ledger had been posted
to the wrong side of the discount allowed account in the nominal ledger
c. Cheques received from Ibrahim a customer amounting to GH¢18,200 was entered correctly
in the cash book but has been credited to the personal account as GH¢12,800
d. A credit purchase of GH¢27,000 from Ruth has not been entered on her personal account
in the bought ledger.
e. A credit note of GH¢12,600 for goods returned by Korkor a customer had been entered
twice in the return inward book and credited twice to the personal account of the customer
f. A payment of GH¢39,000 on 30th Dec for repairs of motor vehicle had been debited to the
motor vehicle account.
g. Part of the company’s premises had been let as from 1st December at a monthly rent of
GH¢6,000 on 1ST Dec. The tenant paid three months’ rent in advance. This amount had
been entered in the cash book but no other entry had been made in any other account.
You are required to:
a. Write up journal entries to correct the above errors
b. Show the suspense account
c. Calculate the amount of the net profit after correcting the above.

Expert Solution
steps

Step by step

Solved in 4 steps

Blurred answer
Knowledge Booster
Receivables Management
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education