a. The following is the trial balance of Abete Trading Company as at 31st December 2020:
| Le | Le | |
|
Depreciation of fixed assets |
9,260 | |
|
Stock as 1st January 2020 |
3,600 | |
|
Purchases and sales |
100,000 | 174,000 |
|
General expenses |
170,00 | |
|
Fixed assets |
42,600 | |
|
Returns |
2,400 | 4,800 |
|
Discounts |
400 | 2,000 |
|
Salaries and wages |
21,000 | |
| Suspense account | 3,060 | |
| 190,060 |
190,060 |
Additional information
(i) Stock in hand on 31st December 2020 was Le 4,000
(ii) Investigation revealed the following errors which necessitated the opening of suspense account:
- Drawings of Le 1,000 was posted to salaries and wages account
- Furniture bought at Le 1,560 was wrongly debited to fixed asset as Le 300
- Purchases day book was undercast by Le 2,000
- Discount allowed of Le 200 to a customer had not been posted to the customer's account
(iii) Depreciation of fixed assets is 10% per annum.
You are required to:
Correct the errors through journal entries (no narration is required).
b. The following is the trial balance of Abete Trading Compnay as at 31st December 2020:
| Le | Le | |
|
Depreciation of fixed assets |
9,260 | |
|
Stock as 1st January 2020 |
3,600 | |
|
Purchases and sales |
100,000 | 174,000 |
|
General expenses |
170,00 | |
|
Fixed assets |
42,600 | |
|
Returns |
2,400 | 4,800 |
|
Discounts |
400 | 2,000 |
|
Salaries and wages |
21,000 | |
| Suspense account | 3,060 | |
| 190,060 |
190,060 |
Additional information
(i) Stock in hand on 31st December 2020 was Le 4,000
(ii) Investigation revealed the following errors which necessitated the opening of suspense account:
- Drawings of Le 1,000 was posted to salaries and wages account
- Furniture bought at Le 1,560 was wrongly debited to fixed asset as Le 300
- Purchases day book was undercast by Le 2,000
- Discount allowed of Le 200 to a customer had not been posted to the customer's account
(iii) Depreciation of fixed assets is 10% per annum.
You are required to:
Prepare Trading, Profit and Loss Account for the year ended 31st December, 2020
Explanation
Video Explanation
No video available
Post your Contribution
Discussions (2)
The computation of the journal is wrongly recorded. Usually, accounts with debit nature are recorded first before those with credit nature. The question concerning discount allowed is implying that the discount allowed has been recorded and as such, the #400 in the trial balance is the actual balance of discount allowed and not #600. The question is saying that it is in the books of the customer that it has not been recorded and not in the books of Abete. Therefore in the books of Abete, the accounts that are affected are suspense account (debited) and the customer's account (credited).
In the income account, salaries and wages was ommitted and the wrong entry of the error concerning discount allowed and customer account and suspense account wrongly recorded as #600 inteasd of #400.
In the trading, profit and loss account salaries and wages was omitted and depreciation on fixed asset was also not recorded
