Error Correction

FA – L1 – Q65 – Bank Reconciliations

Demonstrate adjustments needed to KW Ltd's cash book for July 20X9 due to errors and unrecorded transactions.

Question

The following is a summary from the cash book of KW Ltd for July 20X9:

Opening balance	1,530
Receipts	23,104
Payments	23,005
Closing balance	1,629

On investigation it was discovered that:
(i) Bank charges of GH₵15 shown on the bank statement have not been entered in the cash book.
(ii) A cheque drawn for GH₵110 to pay a supplier has been entered in the cash book as a receipt.
(iii) A cheque from a customer for GH₵120, which was banked (and included above in receipts), has been returned by the bank, but this has not been adjusted in the company’s books.
(iv) An error of transposition which occurred in the opening balance of the cash book should have been recorded as GH₵1,350.
(v) Cheques totaling GH₵264 have been sent by post to suppliers but were not presented to the company’s bank until August 20X9.
(vi) The last page of a bank account paying-in book shows a deposit of GH₵1,040 which was not credited to the account by the bank until 1st August 20X9.
(vii) The company’s bank statement at 31st July 20X9 shows a balance of GH₵318.

Required:
(a) Demonstrate any adjustments needed to the company’s accounting records.

(b) Prepare a Bank Reconciliation Statement as at 31st July 20X9.

Answer

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Tags: Adjustments, Bank reconciliation, Bank statement, Cash book, Cheques, Deposits, Error Correction, Financial accounting
Level: Level 1

Topic: Bank reconciliations

FA – L1 – Q64 – Correction of Errors

Prepare journal entries to correct errors in Mensah and Partners' trial balance, including irrecoverable debts and misposted transactions.

Question

The trial balance of Mensah and Partners did not agree as at 31 December 20X9, and the difference was carried to a suspense account. On scrutinising the books of account, the following types of errors were detected:
(i) Receivables include GH₵15,000 which are irrecoverable and need to be written off.
(ii) Goods invoiced at GH₵4,600 were returned by a customer. It was entered in the purchases book and posted from there to a creditor’s account as GH₵6,400.
(iii) A cheque of GH₵8,000 received from a customer was not posted to his ledger account. Moreover, the corresponding sales invoice for GH₵12,000 was incorrectly passed through the sales day book as GH₵2,000.
(iv) Sales include goods sold for cash amounting to GH₵25,000 on behalf of Mr Kwame. Mensah and Partners were entitled to a commission of 10% on the sales plus selling expenses, for which no adjustment was made. The related selling expenses amounted to GH₵1,500.
(v) An amount of GH₵3,800 owed by Y & Co. for goods supplied was to be adjusted against an amount of GH₵8,500 owed to Y & Co. No entry has been made in this regard.
(vi) A purchase of GH₵15,100 was entered in the purchase day book as GH₵1,500 and posted to the supplier’s account as GH₵5,100.
(vii) Goods invoiced at GH₵23,000 and returned by J K, a debtor, were entered in the purchase day book and posted therefrom to K J, a creditor, as GH₵32,000.
(viii) A supplier’s invoice for GH₵12,300 had been entered in the purchase day book on 28 December 20X9. However, the goods were received on 2 January 20Y0.
(ix) Some items of furniture which stood in the books at GH₵24,000 on 1 January 20X9 were disposed of on 30 June 20X9 in exchange for new furniture costing GH₵20,800. A net invoice of GH₵9,200 was passed through the purchase day book. Depreciation on furniture is charged at 10% on written down value.
(x) Mensah and Partners maintains an allowance of 5% of the gross amount of receivables.

Required:
Prepare journal entries to rectify the errors identified above.
(Narrative is not required.)

Answer

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Tags: Bad Debt, Depreciation, Error Correction, Inventory, Journal entries, Purchases, Receivables, Sales, suspense account, Trial Balance
Level: Level 1

Topic: Correction of Errors

FA – L1 – Q63 – Correction of Errors

Prepare journal entries to correct errors in B.B. Ventures' trial balance, including unposted returns, sales errors, and inventory issues.

Question

The trial balance prepared by B.B. Ventures showed a difference of GH₵47,060, which was put on the credit side of a suspense account. An investigation disclosed that:
(i) The total of purchase return day book amounting to GH₵16,160 had not been posted to the ledger.
(iii) The sales account had been added short by GH₵10,000.
(iv) An asset bought four years ago for GH₵7,000 and depreciated to GH₵1,200 had been sold for GH₵1,500 at the beginning of the year. The receipt of cash has been posted in the bank book but corresponding entries have not been recorded.
(v) A credit sale of GH₵1,470 had been credited to the customer’s account as GH₵1,740. An irrecoverable debt of GH₵1,560 has to be written off. Allowance for receivables is to be maintained at 10% of receivables. Receivables appearing in the trial balance are GH₵23,390, and the allowance for receivables account shows a credit balance of GH₵2,320.
(vi) A sub-total of GH₵29,830 on the list of closing inventory had been carried over as GH₵29,380, and another sheet had been overcast by GH₵1,000.

Required:
(a) Prepare journal entries to correct the above errors. (Narrations are not required)

(b) Explain why it is important that the accountant of B.B. Ventures behaves in an ethical manner when preparing financial statements.

Answer

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Tags: Error Correction, Ethics, Financial accounting, Financial Reporting, Professional conduct, Trial Balance
Level: Level 1

Topic: Correction of Errors

FA – L1 – Q62 – Correction of Errors

Prepare journal entries to correct errors in Western Medical Supplies' trial balance as of June 30, 20X9.

Question

The trial balance of Western Medical Supplies showed a short credit of ZM₵6,264 as at June 30, 20X9. A suspense account was opened for the difference and the profit for the year was then calculated at ZM₵956,180.
The following errors and adjustments were discovered subsequently:
(i) An invoice of ZM₵3,700 was debited to purchases but the goods were received after year-end and were not included in the closing inventory.
(ii) Store equipment costing ZM₵8,100 and having a book value of ZM₵3,600 was sold for ZM₵2,500. Cash was debited and store equipment was credited. No other entries were made.
(iii) A cheque of ZM₵1,850 received from a customer was dishonoured on June 25, 20X9 but no entry was made in the books. Cash there against was received after year-end.
(iv) Purchase of office equipment costing ZM₵15,200 was entered in the purchases account. Depreciation on office equipment is provided at the rate of 10%.
(v) A purchase invoice of ZM₵197 was debited to the supplier account as ZM₵917.
(vi) Purchase returns book was under-casted by ZM₵650.
(vii) The opening balance of furniture account was brought forward as ZM₵18,300 instead of ZM₵13,800. Depreciation on furniture is provided at the rate of 10%.
(viii) A balance of ZM₵730 in the sales ledger is to be offset against a balance of ZM₵880 in the purchase ledger.

Required:
(a) Prepare journal entries to adjust the above items.

(b) Recalculate the net profit for the year.

Answer

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Tags: Depreciation, Error Correction, Inventory, Net profit, Non-current Assets, Payables, Profit Adjustment, Receivables, suspense account, Trial Balance
Level: Level 1

Topic: Correction of Errors

FA – L1 – Q52 – Control accounts and account reconciliations

Adjust sales/purchase ledger control accounts and reconcile with individual ledger balances for Kofi Enterprises.

Question

Kofi Enterprises maintains accounts on a fully integrated computerised accounting system which produces control accounts as an integral part of the DOUBLE ENTRY system. At the end of each month individual sales and PURCHASE ledger balances are reconciled automatically to the respective control accounts as a pre-programmed control check.

Unfortunately Kofi was taken ill in the middle of August and his assistant input a number of entries without the correct integration codes. Consequently the system has been unable to reconcile the control accounts at the end of that month. The assistant has manually extracted the individual ledger balances, and the net totals at 31 August are as follows.

Purchase ledger	Sales ledger
GH¢3,556	GH¢8,946

The assistant has also manually produced draft accounts for the six months to 31 August and provides you with the following abridged trial balance.

	GH¢	GH¢
Sales ledger control account	8,979
Purchase ledger control account		7,496
Net profit per draft accounts		4,322
Sundry balances (net)	2,839
	11,818	11,818

You have checked through the accounting records and discovered the following discrepancies.
(1) The total for the PURCHASES day book input total for August has been incorrectly shown as GH¢6,241 following a manual override. The total should have been GH¢2,641.
(2) An old debit balance of GH¢28 in the PURCHASE ledger had been written off during August as bad. You discover that no ENTRY had been input other than in the individual supplier’s ledger account.
(3) A payment of GH¢260 on 14 August relating to the payment of a July PURCHASES invoice had been wrongly input in the cash account as wages.
(4) During the month of August there had been a mix-up over goods supplied to a CUSTOMER, Kwame. The goods were invoiced for GH¢62, despatched to Kwame and correctly entered in the system on 5 August. Several items turned out to be defective and were returned by Kwame on 28 August. These goods, originally costing GH¢14, were included in the original invoice of GH¢62 at an amount of GH¢17. No ENTRY was made in the books as a result of the return of the goods but they were manually input into the INVENTORY account at GH¢17. Owing to their damaged state their net realisable value is estimated to be GH¢5.
(5) Kofi has received discounts during the month amounting to GH¢280. However, these have only been manually input to the individual suppliers’ accounts.
(6) Certain discrepancies in the print-out of balances at 31 August have come to light, suggesting a software error might also have occurred. You discover that
(i) debit balances on the sales ledger of GH¢54 and GH¢69 respectively had been completely omitted from the listing
(ii) a CREDIT balance on the PURCHASE ledger of GH¢71 had been listed as a debit balance of GH¢17
(iii) the total of debit entries on Adwoa’s account in the sales ledger had been overcast by GH¢90.

Required
(a) Adjust the sales and PURCHASE ledger control accounts and show the reconciliation of the closing balances with the aggregate of the individual balances extracted from the PURCHASE and sales ledgers.

(b) Compute a revised net profit for the six month period to 31 August.

Answer

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Tags: Bad Debts, Discounts, Error Correction, Financial Statements, Inventory Valuation, Ledger adjustments, Misclassification, Net profit
Level: Level 1

Topic: Correction of Errors

FA – L1 – Q51 – Control accounts and account reconciliations

Prepare a corrected trade receivables control account for Tobi and Co for the year ended 31 October 20X9, adjusting for identified errors.

Question

Tobi and Co sells goods on credit to most of its customers. In order to control a debt collection system, the company maintains a trade receivables ledger control account. In preparing the accounts for the year to 30 October 20X9 the accountant discovers that the total of all the personal accounts in the trade receivables’ ledger amounts to GH¢12,802, whereas the control account balance discloses a balance of GH¢12,550.
Upon investigation the following errors were discovered:
(1) Sales for the week ending 27 March 20X9 amounting to GH¢850 had been omitted from the control account.
(2) An account balance of GH¢300 had not been included in the list of balances.
(3) Cash received of GH¢750 had been entered in a personal account as GH¢570.
(4) A customer had qualified for an early settlement discount when not expected to do so. The amount of GH¢100 had not been entered in the control account.
(5) A personal account balance had been undercast by GH¢200.
(6) A contra item of GH¢400 with the trade payables ledger had not been entered in the control account.
(7) An irrecoverable debt of GH¢500 had not been entered in the control account.
(8) Cash received of GH¢250 had been debited to a personal account.
(9) Discounts received of GH¢50 had been debited to a customer’s ledger account.
(10) Returns inwards valued at GH¢200 had not been included in the control account.
(11) Cash received of GH¢80 had been credited to a personal account as GH¢8.
(12) A cheque for GH¢300 received from a customer had been dishonoured by the bank, but no adjustment had been made in the control account.

Required:
(a) Prepare a corrected trade receivables control account, bringing down the amended balance at 31 October 20X9.

(b) Prepare a statement showing the adjustments that are necessary to the list of personal account balances so that it reconciles with the amended control account balance.

Answer

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Tags: Control Accounts, Error Correction, Financial accounting, ledger reconciliation, Trade Receivables
Level: Level 1

Topic: Control accounts and account reconciliations

FA – L1 – Q50 – Control accounts and account reconciliations

Prepare a receivables control account for Wako Associates with adjustments for errors identified in the sales ledger as of 31 December 20X9.

Question

The net sales ledger balances of Wako Associates aggregated GH¢319,000 as on December 31, 20X9. However, the receivables control account showed balance of GH¢350,410. On checking the following errors were identified:
(i) A credit balance amounting to GH¢1,200 had been omitted from the list of balances.
(ii) The Sales Return Book had been undercast by GH¢12,000.
(iii) A balance owed by Murad amounting to GH¢2,100 had been written off by debiting irrecoverable debts and crediting allowance for receivables accounts.
(iv) A debit balance of GH¢2,600 in the sales ledger had been listed as a credit balance.
(v) No entry had been made in the control account to record transfer of GH¢3,600 standing to the credit of David’s account in the purchases ledger to his account in the sales ledger.
(vi) Goods returned by Kwame amounting to GH¢1,700 were credited to his account in the sales ledger but debited to purchase account in the general ledger.
(vii) Enoch had been expected to take a settlement discount of GH¢800 and this had been correctly accounted for. However, Enoch did not settle on time and thus did not qualify for the discount.
(viii) A dishonoured bill of exchange from AC & Company for GH¢1,800 was properly entered in sales ledger but was debited to miscellaneous expense account in general ledger.
(ix) GH¢450 received from Thompson & Co., a customer, were correctly posted in the control account but was debited in the customers ledger as GH¢540.
(x) The trial balance included a credit balance of GH¢18,000 in the suspense account. It was revealed that 60% of the amount represents posting errors in the receivables control account.

Required:
(a) The receivables control account showing the necessary adjustments.

(b) A statement reconciling the receivables ledger balance with the corrected balance of the receivables control account.

Answer

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Tags: Account Reconciliation, Adjustments, Double Entry, Error Correction, Financial accounting, Ledger balances, Receivables control account, Sales Ledger, suspense account, Trade Receivables
Level: Level 1

Topic: Control accounts and account reconciliations

FA – L1 – Q48 – Control accounts and account reconciliations

Reconcile receivables control account with ledger balances, correcting errors to determine trade receivables for Adom Ventures.

Question

Adom Ventures uses a sales day book to record its sales. A receivables control account is maintained in the general ledger whereas a receivables ledger is maintained separately. On December 31, 20X9, the total of the list of receivables amounting to GH₵301,000 as per receivables ledger did not agree with the balance in the receivables control account which showed a balance of GH₵345,000. On checking, the following errors were discovered:
(i) The credit side of the subsidiary account of Kofi has been under cast by GH₵7,000.
(ii) Invoice number 23612 sent to Yaw amounting to GH₵11,000 has been recorded twice in the sales day book but has not been recorded at all in the receivables ledger.
(iii) A debit balance of GH₵9,300 and credit balances amounting to GH₵4,600 had been omitted from the list of balances.
(iv) An account of GH₵1,800 owed by Ama had been written off as irrecoverable on March 31, 20X9 and debited to irrecoverable debts, but no entry had been made in the control account.
(v) A debit balance of GH₵2,000 in the receivables ledger had been listed as a credit balance.
(vi) No entry had been made in the control account in respect of a transfer of GH₵4,100 standing to the credit of Kwame’s account in the purchases ledger to his account in the sales ledger.
(vii) The total of sales returns book had been under cast by GH₵12,000.
(viii) The list of balances had been overcast by GH₵1,000.
(ix) B’s account had been credited with GH₵3,400 for goods returned by him but no other entry had been made in the books.

Required
Prepare a statement reconciling the balance as per the list with the receivables control account clearly identifying the amount which shall be reported in the statement of financial position as ‘trade receivables’.

Answer

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Tags: accounting adjustments, Double Entry, Error Correction, Financial accounting, Irrecoverable debts, ledger reconciliation, Receivables control account, sales day book, suspense account, Trial Balance
Level: Level 1

Topic: Control accounts and account reconciliations

FA – L1 – Q47 – Control accounts and account reconciliations

Correct errors in trade payables control account and payables ledger with journal entries and state the correct total balance.

Question

KRAIS Solutions

The balance on the trade payables control account is GH₵79,500,000. This does not agree with the sum of the balances on the accounts in the payables ledger.

On investigation, you discover the following errors:

(1) Purchases of GH₵1,850,000 from Vendor X have been recorded in the payables control account, but not in the vendor’s account in the payables ledger.

(2) A payment of GH₵2,000,000 to Vendor Y has been correctly recorded in the bank account in the ledger, but not in Vendor Y’s account in the payables ledger.

(3) A discount received of GH₵300,000 from Vendor Z has been recorded correctly in the payables control account, but not in Vendor Z’s account in the payables ledger.

(4) Purchase returns to Vendor W of GH₵1,500,000 have been correctly recorded in Vendor W’s account in the payables ledger, but have not been recorded at all in the main ledger.

Required

Prepare journal entries to correct the errors. (Note: When the error is in the payables ledger, only one entry, a debit or a credit, is required as a journal entry.)

State the correct total balance for trade payables.

Answer

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Tags: Account Reconciliation, Control Accounts, Error Correction, Journal entries, Payables Ledger, Trade Payables
Level: Level 1

Topic: Control accounts and account reconciliations

Tag (SQ): Error Correction

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FA – L1 – Q65 – Bank Reconciliations

Demonstrate adjustments needed to KW Ltd's cash book for July 20X9 due to errors and unrecorded transactions.

FA – L1 – Q64 – Correction of Errors

Prepare journal entries to correct errors in Mensah and Partners' trial balance, including irrecoverable debts and misposted transactions.

FA – L1 – Q63 – Correction of Errors

Prepare journal entries to correct errors in B.B. Ventures' trial balance, including unposted returns, sales errors, and inventory issues.

FA – L1 – Q62 – Correction of Errors

Prepare journal entries to correct errors in Western Medical Supplies' trial balance as of June 30, 20X9.

FA – L1 – Q52 – Control accounts and account reconciliations

Adjust sales/purchase ledger control accounts and reconcile with individual ledger balances for Kofi Enterprises.

FA – L1 – Q51 – Control accounts and account reconciliations

Prepare a corrected trade receivables control account for Tobi and Co for the year ended 31 October 20X9, adjusting for identified errors.

FA – L1 – Q50 – Control accounts and account reconciliations

Prepare a receivables control account for Wako Associates with adjustments for errors identified in the sales ledger as of 31 December 20X9.

FA – L1 – Q48 – Control accounts and account reconciliations

Reconcile receivables control account with ledger balances, correcting errors to determine trade receivables for Adom Ventures.

FA – L1 – Q47 – Control accounts and account reconciliations

Correct errors in trade payables control account and payables ledger with journal entries and state the correct total balance.

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FA – L1 – Q65 – Bank Reconciliations

Demonstrate adjustments needed to KW Ltd's cash book for July 20X9 due to errors and unrecorded transactions.

You're reporting an error for "FA – L1 – Q65 – Bank Reconciliations"

FA – L1 – Q64 – Correction of Errors

Prepare journal entries to correct errors in Mensah and Partners' trial balance, including irrecoverable debts and misposted transactions.

You're reporting an error for "FA – L1 – Q64 – Correction of Errors"

FA – L1 – Q63 – Correction of Errors

Prepare journal entries to correct errors in B.B. Ventures' trial balance, including unposted returns, sales errors, and inventory issues.

You're reporting an error for "FA – L1 – Q63 – Correction of Errors"

FA – L1 – Q62 – Correction of Errors

Prepare journal entries to correct errors in Western Medical Supplies' trial balance as of June 30, 20X9.

You're reporting an error for "FA – L1 – Q62 – Correction of Errors"

FA – L1 – Q52 – Control accounts and account reconciliations

Adjust sales/purchase ledger control accounts and reconcile with individual ledger balances for Kofi Enterprises.

You're reporting an error for "FA – L1 – Q52 – Control accounts and account reconciliations"

FA – L1 – Q51 – Control accounts and account reconciliations

Prepare a corrected trade receivables control account for Tobi and Co for the year ended 31 October 20X9, adjusting for identified errors.

You're reporting an error for "FA – L1 – Q51 – Control accounts and account reconciliations"

FA – L1 – Q50 – Control accounts and account reconciliations

Prepare a receivables control account for Wako Associates with adjustments for errors identified in the sales ledger as of 31 December 20X9.

You're reporting an error for "FA – L1 – Q50 – Control accounts and account reconciliations"

FA – L1 – Q48 – Control accounts and account reconciliations

Reconcile receivables control account with ledger balances, correcting errors to determine trade receivables for Adom Ventures.

You're reporting an error for "FA – L1 – Q48 – Control accounts and account reconciliations"

FA – L1 – Q47 – Control accounts and account reconciliations

Correct errors in trade payables control account and payables ledger with journal entries and state the correct total balance.

You're reporting an error for "FA – L1 – Q47 – Control accounts and account reconciliations"

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