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Question Three: Part (A) The bookkeeper of Nancy Ltd. extracted a trail balance on 31 December 2012 which failed to agree by £ 400, a shorta opened to reflect the difference. ge on the credit side of the trial balance. Consequently, a suspense account was In January 2013 the following errors made in 2012 were found: (i) (ii) Til) (iv) (v) Rent account had been undercast by £200. Sales day book has been undercast by £300. Sales of £500 to T. Ball had been debited in error to T. Bell account. Discounts allowed account had been overcast by £50. The sale of a computer at net book value had been credited in error to the sales account £400. Purchase day book had been overcast by £120. Discount received account had been undercast by £75 (vi) (Vii) (vii) Bank interest income had been undercast by £55. You are required to: (a) Show the journal entries to correct the errors. (b) Draw up the suspense account after the errors described have been corrected. (7 marks) (8 marks)
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Journal EntrieS Post Ref. Date Account Title and Explaination Debit Credit Rent £200.00 Suspense £200.00 To rectify rent undercast) Suspense £300.00 Sales Revenue £300.00 To rectify Sales Revenue Accounts Receivable T.Ball £500.00 Accounts Receivable - T.Bell £500.00 To rectify error in accounts Receivables) Suspense £50.00 Discount Allowed £50.00 To rectify Discount allowed) Sales Revenue £400.00 c omputer £400.00 To rectify error in sale of computerAccounts Receivable T.Ball £500.00 Accounts Receivable - T.Bell £500.00 To rectify error in accounts Receivables) Suspense £5Suspense Dr Cr £400.00 £200.00 Difference- rent Sales discount allowed purchases iscount receivec £300.00 £50.00 £120.00 £75.00 £55.00 bank interest Totals £600.00 £600.00

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