- 15 Marks
FA – L1 – Q60 – Correction of Errors
Prepare journal entries to correct errors in a trial balance and clear a suspense account for a company with a debit-credit imbalance.
Question
The accountant of Apex Chemical Solutions has prepared a trial balance, but has found that the total of debit balances is GH₵864,600 and the total of credit balances is GH₵862,150.
On investigation, he discovers the following errors in the book-keeping:
(1) Total purchases in the period were recorded at GH₵100 below their correct value, although the total value of trade payables was correctly recorded.
(2) Total telephone expenses were recorded at GH₵1,000 above their correct amount, although the total value of the amounts payable was correctly recorded.
(3) Purchase returns of GH₵550 were recorded as a debit entry in the sales returns account, but the correct entry had been made in the trade payables control account.
(4) Equipment costing GH₵2,000 had been recorded as a debit entry in the repairs and maintenance account.
(5) Rental expenses of GH₵5,490 were entered incorrectly as GH₵5,940 in the expense account but were entered correctly in bank account in the ledger.
(6) Bank charges of GH₵200 have been omitted entirely from the ledger.
Required
Prepare journal entries for the correction of the errors.
Open a suspense account. Record the appropriate corrections in the suspense account, so that the balance on this account is eliminated.
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