Gail Dawson is the owner of a retail business. She has employed an inexperienced bookkeeper to maintain her accounting records.

(a) On 31 March 20X9, the end of the business’s accounting year, the bookkeeper extracted the following trial balance from the business’s records:

Required:

1. A corrected version of Gail Dawson’s trial balance dated 31 March 20X9 based on the above information, but with an amended figure for the suspense account.

(b) The following errors were found in the accounting system after a corrected version of the trial balance above was prepared.

(i) The total of the sales day book for December 20X8 had been overstated by £120.

(ii) In January 20X9 some new office equipment had been purchased for £360; this had been debited to the purchases account.

(iii) A payment by cheque to a creditor, £216, had been entered in the books as £261.

(iv) A credit note for £37 sent to a customer had been overlooked.

(v) The owner had withdrawn a cheque for £80 for private use in October 20X8; both the bank and drawings account had been credited with this amount.

Required:

In the books of Gail Dawson

2. Journal entries to correct each of these errors.

3. The suspense account. (Start with the amount in the corrected trial balance given in answer to Required 1 above, and include any entries arising from the correction of the errors.)

4. An explanation of the term ‘error of commission’.

Transcribed Image Text:

Fixed assets at cost Provision for depreciation of fixed assets, 1 April 20X8 Stocks 1 April 20X8 31 March 20X9 Trade debtors Trade creditors Balance at bank (overdrawn) Capital Drawings Sales Trial Balance at 31 March 20X9 Purchases Running expenses Provision for doubtful debts Suspense Dr £ 18,300 2,800 3,700 864 382 7,740 26,080 6,904 90 £66,860 Cr 4 2,960 1,825 26,860 18,327 16,888 £66,860