QUESTION 3 (30 MARKS) At the year-end of ABC Ltd, an imbalance in the trial balance was revealed which resulted in the creation of a suspense account with a credit balance of $2,080. Investigations revealed the following errors. 1. A sale of goods on credit for $2,000 had been omitted from the sales account. 2. Delivery and installation costs of $480 on a new item of plant had been recorded as a revenue expense. 3. Cash discount of $300 on paying a supplier, Jenna, had been taken, even though the payment was made outside the time limit. 4. Inventory of stationery at the end of the period of $480 had been ignored. 5. A purchase of raw materials of $700 had been recorded in the purchases account as $1,700. 6. The purchase returns day book included a sales credit note for $460 which had been entered correctly in the account of the customer concerned, but included with purchase returns in the nominal ledger. REQUIRED (a) Prepare journal entries to correct each of the above errors. Narratives are not required. [12 marks] (b) Open a suspense account and show the corrections to be made. [4 marks] (c) Prior to the discovery of the errors, ABC's profit for the year at $37,000. Calculate the revised profit figure after the correction of the errors. [8 marks] (c) Explain, by giving examples, the following three errors which do not affect the trial balance agreement. Error of principle Complete reversal of entries Error of original entry [6 marks]