Question

rial balance of Vivien for 30 June 2016 did not agree, and the difference Suspense Account. fference was por een correctly to urchases ledger (v) The following errors were subsequently discovered: (1) A payment by Fatt Lee, a debtor, had been posted to the account of Lee Fatt (11) A credit note for RM234 from Ali had been posted to the account of Alias (111) Discounts allowed of RM123 had been posted to the credit of discounts rer (IV) Goods totalling RM4,567 had been purchased and had been correctly the purchases day book, but had not been posted to the purchases ledel account. No entries were made in the books for goods originally sent to Wong on a sale or basis. These goods have now been sold and the value to be invoiced is RM4321 (vi) A new conservatory had been built at the house of Sue Lai. The cost of the conse was RM6,789 and this had been charged to the 'factory building' account. (vii) The purchases day book had been undercast by RM1,000. The sales day book hall undercast by the same amount. (viii) An invoice from Kasim for RM2,250 had been entered in the purchases day bond RM2,520. TO S TESSO Required: a. Identify the types of error which have occurred in items (i) to (viii) above. b. Prepare the journal entries for 30 June 2016, with narratives, to correct items (i) 8. (vi) and (viii). c. Prepare the suspense account, showing clearly the original difference on the accu

Answer 1

a) i) It is error of Posting as payment by Fatt Lee is wrongly posted to Lee Fatt.

ii) It is Transposition error as credit not RM 234 has been posted in the books of Ali as RM23

iii) It is error of subsdiary enteries as discount allowed has been posted as discount received.

iv) It is error of omission as goods purchased has not been posted to purchases ledger control account.

v) It is error of omission as no entry is made on sale to wong.

vi) It is error of principle as cost of conservative has been charged to factory building account.

vii) It is error of ommission as purchases and sales has been undercast by 1000.

viii) It is transposition error as amount of 2250 has been recorded as 2520.

B) Journal Enteries:

iii) Discoount received Dr RM123

To Discount allowed