The bookkeeper of Devil’s League, having been unable to agree the trial balance, raised a suspense account in which he entered the difference.
DRCR
GH₵GH₵
Business premises31,400
Equipment20,000
Sales90,000
Purchases62,500
Inventory (1/1/2016) 8,000
Payables 3,000
Receivables 9,000
Bank 18,000
Rates 1,500
General expenses 2,500
Capital 60,000
Suspense 100
153,000153,000
Upon examination of the books, the following errors were detected:
i. The purchases journal has been under casted by GH₵ 7,500
ii. Goods bought from a supplier amounting to GH₵ 18,500 had been posted to the credit of his account as GH₵ 15,800
iii. A cheque of 16,000 received from a debtor and paid to bank has been dishonoured Nothing concerning the dishonour has been entered in the books.
iv. An item of GH₵ 800 entered in the sales returns book has been posted to the debit of the customer who returned the goods.
v. An old equipment sold for GH₵ 5,000 had been entered in the sales day book, the total of which had been posted to the sales account.
vi. An amount GH₵ 4,500 owing to a supplier had been omitted from the list of sundry creditors.
vii. Discounts amounting to GH₵ 400 allowed to a customer had been dully entered in his account, but not entered in the nominal ledger.
viii. An amount of GH₵ 1,000 being rates treated as prepaid in the previous year had not been brought as a balance on the rates account.
You are required to draw up a
a. Journal entries to correct the errors
b. Suspense Account
c. Corrected trial balance