The trial balance as at 30 April 2019 of Timber Products Limited was balanced by the inclusion of the following debit balance:

Subsequent investigations revealed the following errors:
(i) Discounts received of £324 in January 2019 have been posted to the debit of the discounts allowed account.
(ii) Wages of £2,963 paid in February 2019 have not been posted from the cash book.
(iii) A remittance of £940 received from K. Mitcham in November 2018 has been posted to the credit of B. Mansell Limited.
(iv) In December 2018, the company took advantage of an opportunity to purchase a large quantity of stationery at a bargain price of £2,000. No adjustments have been made in the accounts for the fact that three-quarters, in value, of this stationery was in the inventory on 30 April 2019.
(v) A payment of £341 to J. Winters in January 2019 has been posted in the personal account as £143.
(vi) A remittance of £3,000 received from D. North, a credit customer, in April 2019 has been credited to sales.
The draft accounts for the year ended 30 April 2019 of Timber Products Limited show a net profit of £24,760.
Timber Products Limited has very few personal accounts and therefore does not maintain either a purchases ledger control account or a sales ledger control account.
Required:

(a) Prepare the difference on trial balance suspense account showing, where appropriate, the entries necessary to correct the accounting errors.

(b) Prepare a computation of the corrected net profit for the year ended 30 April 2019 following corrections for the above accounting errors.

(c) Outline the principal uses of trial balances.

Transcribed Image Text:

Difference on trial balance suspense account 2,513.