After a year’s trading the following balances appeared in the ledger of Nicholas Davidson on 31 May 20-6:

£

Stock 2,025 Drawings 1,396 Carriage outwards 194 Wages and salaries 16,830 Discount allowed 103 Creditors 2,405 General expenses 810 Purchases 10,092 Bad Debts 158 Sales 14,580 Returns inwards 175 Debtors 3,890 Discount received 369 Premises 38,500 Returns outwards 238 Petty cash 82 Cash at bank 1,837 Capital ?

A short time later the following information was discovered:

(i) Nicholas Davidson’s private motor expenses had been entered in general expenses; these are estimated to be 20 per cent of general expenses

(ii) A Slowman, who owes the firm £240, has been declared bankrupt; a cheque for 15 per cent of the amount owed is received in full and final settlement of the debt, the remainder is to be written off as a bad debt

(iii) An invoice for £158 received from M Ramsden, a supplier, had not been entered in the books

(iv) Goods bought on credit from F Greenwood costing £350 had been incorrectly posted to the account ofT Greenfield You are required to:

(a) Prepare a trial balance as at 31 May 20-6 after considering the above information and calculate the capital account balance.

(b) Show journal entries to record items (i)-(iv). Full narrations are required.

(c) Clearly show the correct date against the stock item in your trial balance.