Question 2 (25 marks) A Designer Ltd is an old-fashioned business with a handwritten set of books. A trial balance is extracted at the end of each year, and financial statements are prepared. This year, however the trial balance does not balance, the credit exceeding debits by N$1 536.

You are asked to help and after inspection of the ledgers discover the following errors.

i) A balance of N$87 on a debtors account has been omitted from the schedule of debtors, the total of which was entered as a debtor in the trial balance. ii) A small piece of machinery purchased for N$1 200 had been written off to repairs. iii) The receipts side of the cash book had been under cast by N$720. iv) The total of one page of the sales day book had been carried forward as N$8 154, whereas the correct amount was N$8 514. v) A credit note for N$179 received from a supplier had been posted to the wrong side of his account. vi) An electricity bill in the sum of N$152, not yet accrued for is discovered in a filing tray. vii) Mr Smith, whose past debts to the company to the company had been the subject of provision, at last paid N$731 to clear his account. His personal account has been credited but the cheque has not yet passed through the cash book. You are required to:

a) Show the journal entries necessary to correct the errors. Narrations are not required. (14 marks)

Page 14 of 15

Question 2 (25 marks) A Designer Ltd is an old-fashioned business with a handwritten set of books. A trial balance is extracted at the end of each year, and financial statements are prepared. This year, however the trial balance does not balance, the credit exceeding debits by N$1 536. You are asked to help and after inspection of the ledgers discover the following errors. i) A balance of N$87 on a debtors account has been omitted from the schedule of debtors, the total of which was entered as a debtor in the trial balance. ii) A small piece of machinery purchased for N$1 200 had been written off to repairs. iii) The receipts side of the cash book had been under cast by N$720. iv) The total of one page of the sales day book had been carried forward as N$8 154, whereas the correct amount was N$8 514. v) A credit note for N$179 received from a supplier had been posted to the wrong side of his account. vi) An electricity bill in the sum of N$152, not yet accrued for is discovered in a filing tray. vii) Mr Smith, whose past debts to the company to the company had been the subject of provision, at last paid N$731 to clear his account. His personal account has been credited but the cheque has not yet passed through the cash book. You are required to: a) Show the journal entries necessary to correct the errors. Narrations are not required. (14 marks)

Page 14 of 15 b) Draw up the suspense account after the errors have been corrected. (6 marks) c) The net profit originally calculated at N$25 370. Show your calculation of the correct figure. (5 marks)

b) Draw up the suspense account after the errors have been corrected. (6 marks) c) The net profit originally calculated at N$25 370. Show your calculation of the correct figure. (5 marks)