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Question Two 2 (b) Nene Koba, is a sole trader with a small business. The trial balance extracted as at 30 June 2018 did not

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Question Two 2 (b) Nene Koba, is a sole trader with a small business. The trial balance extracted as at 30 June 2018 did not agree. The credits exceeded the debits by GH3,275 and the difference was entered in a suspense account. A detailed examination of the books was undertaken and the following matters were uncovered: Purchases returns of GH19,350 has been credited to sales returns as GH11,175, and the corresponding entry was correctly entered. An addition error was discovered in the sales returns day book and as a result, the posting to the ledger was understated by GH1,600. An amount of GH245 cash received from a customer was debited to the customer's account and credited to the cash account. The cash at hand balance of GH5,350 as at 30 June 2018 was omitted from the trial balance in error. Building repairs of GH4,300 were undertaken during the month ended 30 June 2018, the amount was paid by cheque. The entry was correctly treated in the bank account but GH1,800 was credited to building. On 1 January 2017, rent for the year ended 31 December 2017 of GH 22,500 was paid and accounted for correctly. Nene Koba's landlord has indicated that rent for 2018 will increase to GH 30,000 but no invoice has been received. Nene Koba however, has not paid any rent for 2018 and has made no accounting entry for it because he has not received an invoice from the landlord. A credit sale of GH12,500 (excluding tax) was recorded by debiting sales with GH 12,500 and crediting receivable with GH12,500. The rate of tax is 15%. Required: i. Prepare journal entries with appropriate narrations necessary to correct the above errors. (8 marks) ii. Prepare the Suspense account. (4 marks) iii. Write short notes on the following: a) Errors of Commission (1.5 Marks) b) Errors of Principle (1.5 Marks)

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