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
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The
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
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
b. Show the suspense account
c. Calculate the amount of the net profit after correcting the above.
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