Self-test Although the trial balance did not balance, we were asked by M Jones to prepare a balance sheet at 31 December 2009. After its preparation, we investigated the errors so as to eliminate the suspense account.

You are required to correct these errors (using journal entries) and show what the net profit should be after allowing for those corrections.

Fixed assets Land & buildings 300,000 Plant & machinery at cost 8,000 Less accumulated depreciation 1,500 6,500 306,500 Current assets Stock 5,190 Debtors 6,200 Bank 1,340 12,730 Current liabilities Creditors 6,100 Suspense 850 6,950 5,780 312,280 Capital 286,000 Add Net profit 62,800 348,800 Less drawings 36,520 312,280 The errors revealed are:

(i) The ledger account for telephone expenses has been overcast by £200.

(ii) A payment of £350 to Joe & Co. (a creditor) was entered only in the cash book.

(iii) The sales account was undercast by £1,000.

(iv) A credit sale to Ace Traders for £450 was incorrectly entered in the sales journal as £540.