Assignment Two

Osvansey Consults Cash Book at January 31, 2021 revealed a balance of GHS3,630 although their bank statement showed GHS5,352. Detailed examination of the two records revealed the following:

(a) The debit side of the cash book had been overcast by GHS300.

(b) A cheque of GHS1,560 drawn for Kingdom Books Ltd., had been omitted by the bank

from its statement.

(c) A cheque of GHS182 drawn in payment of the telephone account had been entered in the

cash book as GHS128 but was shown correctly on the bank statement.

(d) A cheque of GHS210 from Vlay having been paid into the bank was dishonoured.

(e) The bank had debited a cheque for GHS126 to Osvansey Consults account in error.

(f) A dividend of GHS900 on Osvansey Consults holding of ordinary shares has been paid

direct to their bank account and no entry made in the cash book.

(g) Cheques totaling GHS1,260 drawn on January 30 had not been presented for payment.

(h) A lodgement of GHS1,080 on January 31, 2021 had not been credited by the bank.

(i) Interest amounting to GHS228 had been debited by the bank but not entered in the cash

book.

Required:

Prepare a statement reconciling Osvansey Consults corrected cash book with their bank statement at January 31, 2021.

Assignment Three

The Trial Balance of a trading company failed to balance on March 31, 2018. The difference had been entered in a Suspense Account, and final accounts for the year ended March 31, 2018 and a Balance Sheet had been prepared on the basis of the figure shown in the Trial Balance. The net profit arrived at was GHS37,500.

(a) The following errors were subsequently discovered, and on correction the Trial Balance agreed. Discounts, shown as GHS800 on the credit side of the three column Cash Book, had been posted to the debit of Discount Allowed Account.

(b) A payment of GHS720 for repairs to motor vans had been debited to Motor Vans Account.

(c) The bank overdraft of GHS1,720 had been entered in the Trial Balance GHS1,620.

(d) Premises were let to a sub-tenant from March l. The sub-tenant paid GHS1,200 on March l,

representing three months' rent in advance. This had been entered in the Cash Book, but no

other entry had been made.

(e) Goods (selling price GHS750, cost price GHC55) were returned by a customer on March 31.

No entry had been made in the books, and the goods had not been included in the closing

stock.

(f) P. Doe's debit balance of GHS390 had been omitted from the debtors in the Trial Balance.

You are required to:

i. tabulate an answer showing the effect of each of the above errors on the Trial Balance and on the net profit;

ii. show the Suspense Account, bringing out the original difference in the books; and

iii. produce a statement showing the correct net profit after adjustment of the errors