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Mr O'Connell is in business as a sole trader. His draft income statement for the year ended 31 March 2017 shows a net profit of

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Mr O'Connell is in business as a sole trader. His draft income statement for the year ended 31 March 2017 shows a net profit of 51,400. The balance sheet at 31 March 2017 revealsa bank overdraft, as per the cash book, of 1,565. On comparing the bank statements covering transactions up to the end of March 2017 supplied by the bank, with the entries in the cash book for the business, the following differences have been identified: 1. Cheques paid to suppliers totalling 6,740 were entered in the cash book in March 2017 but did not appear on the bank statement. 2. Cheques received from customers on 31st March 2017 amounting to 8,620 were entered 3. A refund from a supplier in respect of a return of purchases in the amount of 650 is 4. A cheque for 875 received from a customer was entered in the cash book and paid into in the cash book on in March 2017 and lodged in the bank but did not appear on the bank statement shown on the bank statement but has not been entered in the cash book. The purchases returns account has not been completed either the bank in January 2018. However, the bank statement to 31st March shows that this was dishonoured as there were not sufficient funds in the customer's account. 875 was debited on the bank statement on 29th March 2018 and the cheque was returned unpaid but not received by Mr O'Connell until April 2018. This is now considered a bad debt as the customer cannot be contacted at the address given. No entry concerning the write off has been recorded in the books. 5. A total amount of bank fees and charges in the amount of 750 are shown on the bank 6. A cheque for 2,100 received from a customer for a cash sale was debited in the statement but these have not been entered in the cash book. Purchases account and credited in the Sales account, in error. No other entry was made in respect of the receipt. Requirement: (i) Show the journal entries necessary to correct the error in note 6 (ii) Show the corrections that should be made to the cash book of Mr O'Connell. (iii) Prepare a bank reconciliation statement as at 31st March 2017 (iv) Prepare a statement showing the corrections required to arrive at the net profit for th year ended 31st March 2017

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