7.(a) If the two sides of a trial balance agree, does this prove the accuracy of the bookkeeping entries? Give reasons for your answer. (b) Wale, an inexperienced book-keeper with Ife-Oluwa Enterprises has drawn up a Trial Balance for the year ended 31st December 20X1. Cr. N'000 Dr. N'000 200 1,654 4,591 1,687 2,983 252 733 Provision for doubtful debts Bank overdraft Capital Trade payables Trade receivables Discount received Discount allowed Office furniture General expenses Purchases Returns inwards Rents and rates Salaries Sales Inventory Provision for depreciation 2,155 829 12,174 330 314 2,520 16,882 2,418 364 26,178 25,052 (c) You are required to draw up a "corrected Trial Balance, debiting or crediting any residual error to a Suspense Account. Further investigation of the Suspense Account ascertained in (a) above reveals the following errors: 117 Foundation of Accounting. An IFRS Approach Error Correction And Control Accounts (i) Goods bought from Y. Adeola amounting to N13,000 had been posted to his account as N33,000. () Furniture which has cost N173,000 had been debited to the general expense account. (ii) An invoice from Sophy Ltd. for N370,000 had been omitted from the Purchase Account but credited to Sophy Ltd. Account. (iv) Sales on Credit to A. Bolude Ltd. for N450,000 had been posted to the Sales Account but not to the debtors' ledger. (v) The balance on the Capital Account had been incorrectly brought forward in the ledger, and should have been N4,29 1,000. (vi) An amount of N86,000 received from Bomi Ade, a debtor in settlement of his account had been treated as a cash sale. (vii) Discount allowed has been undercast by N35,000. (b) You are required to write up the Suspense Account, showing the correction of the errors. (Adapted from University of Lagos) 7.(a) If the two sides of a trial balance agree, does this prove the accuracy of the bookkeeping entries? Give reasons for your answer. (b) Wale, an inexperienced book-keeper with Ife-Oluwa Enterprises has drawn up a Trial Balance for the year ended 31st December 20X1. Cr. N'000 Dr. N'000 200 1,654 4,591 1,687 2,983 252 733 Provision for doubtful debts Bank overdraft Capital Trade payables Trade receivables Discount received Discount allowed Office furniture General expenses Purchases Returns inwards Rents and rates Salaries Sales Inventory Provision for depreciation 2,155 829 12,174 330 314 2,520 16,882 2,418 364 26,178 25,052 (c) You are required to draw up a "corrected Trial Balance, debiting or crediting any residual error to a Suspense Account. Further investigation of the Suspense Account ascertained in (a) above reveals the following errors: 117 Foundation of Accounting. An IFRS Approach Error Correction And Control Accounts (i) Goods bought from Y. Adeola amounting to N13,000 had been posted to his account as N33,000. () Furniture which has cost N173,000 had been debited to the general expense account. (ii) An invoice from Sophy Ltd. for N370,000 had been omitted from the Purchase Account but credited to Sophy Ltd. Account. (iv) Sales on Credit to A. Bolude Ltd. for N450,000 had been posted to the Sales Account but not to the debtors' ledger. (v) The balance on the Capital Account had been incorrectly brought forward in the ledger, and should have been N4,29 1,000. (vi) An amount of N86,000 received from Bomi Ade, a debtor in settlement of his account had been treated as a cash sale. (vii) Discount allowed has been undercast by N35,000. (b) You are required to write up the Suspense Account, showing the correction of the errors. (Adapted from University of Lagos)
