On December 31, 2010, John Henry found that the debit side of his trial Balance exceeded the credit side by $492. The difference was put to a suspense account. February 11 of 2011 the following errors were discovered in the books:
1. $165 paid for the purchase of Fixtures had been entered to Purchases account.
2. Commissions received of $112 was debited to the Commissions received account.
3. The Returns Inwards Book was overcast by $57 and the wrong amount was entered to the Returns Inwards account.
4. $ 217 cash paid to Mike Collester was debited to his account as $271.
5. $15 goods sold to Lee Gray was debited to Lee May’s account.
6. A cheque for $157 received from M. Ruddock was not entered to his account.
(a) State one purpose of the Trial Balance.
(b) Prepare the necessary Journal entries to correct the above mistakes.
(c) Enter up the Suspense Account.
(d) Identify from the above, ONE error of principle and ONE error of commission.
(a) The Trial Balance acts as a statement which arithmetically proves that proper double entry is observed in making accounting entries. There are several errors which will not be revealed by the Trial Balance.
(d)(i) Error of Principle occurred in error # 1 where $165 paid for the purchase of Fixtures had been entered to Purchases account.
(ii) Error of Commission occurred in error # 5 where $15 goods sold to Lee Gray was debited to Lee May’s
R. Guberman keeps a three column Cash Book. All cheques received are banked immediately. All small payments of $20 or less are paid out of a petty cash float of $50 and recorded in a Petty Cash Book with four analysis columns: Postage, Travelling, Sundry Expenses, and small purchases of stock.
Using the following information, you are required to:
1. Write up his Cash Book and balance it.
2. Write up the Petty Cash Book and balance it.
October 16 Balances: Bank 574
Petty Cash 19
17 Reimbursed petty Cash Float
17 E Winters settled his debt of $580 by cash
less 5% discount.
19 Received cheque from A. Adam 675
19 Paid for stock by cheque. 473
20 Bank charges for services. 3
21 Cash sales for the week 720
21 Purchased postage stamps 12
21 Purchased small items of stock 17
22 Banked cash 500
22 Paid for stock by cheque 650
23 Drew cheques for wages. 300
23 Paid taxi fare for errands 7.65
24 Sent R. Boone a cheque to settle a debt
of $750 , less 4% cash discount.
26 Reimbursed petty cash float
26 Paid for postage of package. 18
28 Cash sales for the week 1,275
28 Banked cash 1,553.35
30 A. Adam’s cheque for $675 marked
Dishonoured was returned.
31 Paid for cleaning and painting. 15
The following were transactions for Green Food Enterprises for the month of June 2007.
September 1 Sold Goods to V. Bentley 4,500
September 6 V. Bentley returned goods to us 1,200
September 9 Bought goods on credit from M. Mickey 8,400
September 11 Sold goods on credit to C. Ryan 2,400
September 17 Credit purchases from Discount Wholesalers 3,000
September 22 Returned goods to M. Mickey 400
September 24 Bought Fixtures from Best Furnishings for use in the business 4,900
September 28 Sold goods on credit to B. Gumby 1,350
(A) Make Entries in the books of original entry (subsidiary books) for Green Food Enterprises.
(B) Post the books of original entry to the ledger at the end of the month.