REVIEW QUESTION - CORRECTION OF ERRORS
QUESTION TWO
Give the journal entries needed to record the corrections of the following. Narratives are not
required.
a) Extra capital of Tshs.5,000,000 paid into the bank had been credited to Sales account.
b) Goods taken for own use Tshs.72,000 had been debited to Sundry Expenses.
c) Private rent Tshs.191,000 had been debited to the Rent account.
d) A purchase of goods from D Pine Tshs.246 had been entered in the books as
Tshs.426,000.
e) Cash banked Tshs.410,000 had been credited to the bank column and debited to the cash
column in the cash book.
f) Cash drawings of Tshs.120,000 had been credited to the bank column of the cash book.
g) Returns inwards Tshs.195,000 from G Will had been entered in error in T Young’s
account.
h) A sale of a printer for Tshs.100,000 had been credited to Office Expenses.
QUESTION TWO
The bookkeeping system of TUKUNYEMA is not computerised, and at 30 September
2018 the bookkeeper was unable to balance the accounts. The trial balance totals were: Debit
Tshs.1,796,100,000 Credit Tshs.1,852,817,000
Nevertheless, he proceeded to prepare draft financial statements, inserting the difference as a
balancing figure in the balance sheet. The draft profit and loss account showed a profit of
Tshs.141,280,000 for the year ended 30 September 2018.
He then opened a suspense account for the difference and began to check through the accounting
records to find the difference. He found the following errors and omissions:
(i). Tshs. 8,980,000 - the total of the sales returns book for September 2018, had been
credited to the purchases returns account.
(ii).Tshs.49,600,000 paid for an item of plant purchased on 1 April 2018 had been debited to
plant repairs account. The company depreciates its plant at 20% per annum on a straight
line basis, with proportional depreciation in the year of purchase.
(iii). The cash discount totals for the month of September 2018 had not been posted to the
general ledger accounts. The figures were:
Discount allowed Tshs.836,000
Discount received Tshs.919,000
(iv). Tshs.580,000 insurance prepaid at 30 September 20X7 had not been brought down as an
opening balance
(v). The balance of Tshs.38,260,000 on the telephone expense account had been omitted from
the trial balance
(vi). A car held as a non-current asset had been sold during the year for Tshs.4,800,000. The
proceeds of sale were entered in the cash book but had been credited to the sales account
in the general ledger. The original cost of the car Tshs.12,000,000 and the accumulated
depreciation to date Tshs.8,000,000 were included in the motor vehicles account and the
accumulated depreciation account. The company depreciates motor vehicles at 25% per
annum on a straight line basis with proportionate depreciation in the year of purchase but
none in the year of sale.
Required:
(a). Open a suspense account for the difference between the trial balance totals. Prepare the
journal entries necessary to correct the errors and eliminate the balance on the suspense
account. Narratives are not required.
(b). Draw up a statement showing the revised profit after correcting the above errors.
QUESTION THREE
William Sinyegenye, in business as a dealer in hardware goods, found that his trial balance at
30 September year 12 did not agree and accordingly opened a suspense account. A subsequent
search revealed the following errors or omissions:
1. Goods returned by F Mangunda Tshs.124,000 had been credited to his account and
entered in the returns outwards book.
2. A cheque for Tshs.47,000 received from L Mlelwa had been dishonoured and posted in
error from the cash book to the general expenses account. William had no intention as yet of
treating the debt as irrecoverable.
3. Sinyegenye had taken goods, value Tshs.225,000 at cost, for his personal use: no entry
had been made in the books.
4. A credit note for Tshs.850,000 in respect of a trade-in allowance obtained on one of the
business motor vans had been incorrectly credited to both sales account and moto r vans
disposal account.
5. A payment by cheque of Tshs.45,000 for having the computer installation serviced had
been posted to the computer asset account.
Required:
(i). Journal entries correcting these errors/omissions, including narrations.
(ii). The suspense account
Note: If no entry is required in respect of any item, state this as a note beneath the
account.
(iii). A statement showing the effect of each of these errors/omissions on the profit of the
business:
QUESTION FOUR
On extracting a trial balance, the accountant of ETT discovered a suspense account with a debit
balance of Tshs.1,075,000 included therein; she also found that the debits exceeded the credits by
Tshs.957,000. She posted this difference to the suspense account and then investigated the
situation. She discovered:
1. A debit balance of Tshs.75,000 on the postage account had been incorrectly extracted on
the list of balances as Tshs.750,000 debit.
2. A payment of Tshs.500,000 to a credit supplier, X, had been correctly entered in the cash
book, but no entry had been made in the supplier’s account.
3. When a motor vehicle had been purchased during the year the bookkeeper did not know
what to do with the debit entry so he made the entry Dr Suspense, Cr Bank
Tshs.1,575,000.
4. A credit balance of Tshs.81,000 in the sundry income account had been incorrectly
extracted on the list of balances as a debit balance.
5. A receipt of Tshs.5,000 from a credit customer, Y, had been correctly posted to his
account but had been entered in the cash book as Tshs.625,000.
6. The bookkeeper was not able to deal with the receipt of Tshs.500,000 from the owner’s
own bank account, and he made the entry Dr Bank and Cr Suspense.
7. No entry has been made for a cheque of Tshs.120,000 received from a credit customer M.
8. A receipt of Tshs.50,000 from a credit customer, N, had been entered into his account as
Tshs.5,000 and into the cash book as Tshs.5,000.
What journals are required to correct the errors and eliminate the suspense account?
QUESTION FIVE
Nandy H extracted a trial balance as at 31 December 2017. She was unable to balance it, but as she
urgently needed her accounts for tax purposes, she opened a suspense account and entered TZS
705,000 debit balance in it
The following year she found the errors now listed
a) The sales returns day book had been undercast by TZS 100,000
b) Drawings of TZS 80,000 had been debited to wages account
c) Carriage inwards TZS 75,000 had been debited to carriage outwards
d) A payment of bank charges TZS 270,000 had not been posted to the expense account
e) A sale of goods TZS 385,000 to K Abeid on 30th December 2017 had not been
entered at all
f) Discount allowed of TZS 218,000 had been credited to the discounts allowed account
g) A rent rebate of TZS 200,000 had been entered in the cash book but not posted
elsewhere.
h) The purchase day book had carried forward a figure of TZS 24,798,000 when it
should have been 24,897,000
Required
1. Show the journal entries needed to correct the errors
2. Show the suspense account balanced off
3. If the original incorrect gross profit was shown as 129.487.000 and the original net profit
was shown as TZS 77,220,000 calculate the corrected figures for gross and net profits
after the above items have been corrected.
QUESTION SIX
The trial balance of Jimmy as at 31 st December 2016 does not balance. The difference of TZS
5,400,000 has been credited to a suspense account. The following errors were subsequently
discovered
(a) The sales account is undercast by TZS 3000,000
(b) Purchases received from Dan & Co amounting to TZS 1,147,000 had been received on
31st December 2009 and included in the closing stock at that date. Unfortunately, the
invoice had not been entered in the purchases day book.
(c) Motor repairs of TZS 585,000 have been charged to the motor vehicles account
(d) Credit sales of TZS 675,000 made to J Greenway have been debited to the account of J
Green
(e) A payment of TZS 425,000 in respect of electricity has been debited to the electricity
account as TZS 575,000
(f) A cheque for TZS 2,250,000 received from Teape Ltd, a debtor, has been correctly
entered in the cash book but no entry has been made in Teape’s account
Required
(i)
Show the journal entries, including narratives, to correct the above errors,
(ii)
Write up the suspense account after correction of the above errors
QUESTION SEVEN
The book-keeper of YY Limited extracted a trial balance on 31 December 2016 which failed to
agree by Tshs.330,000 a shortage on the credit side of the trial balance. A suspense account was
opened for the difference. In January 2017 the following errors made in 2016 were found:
(a) Sales day book had been undercast by Tshs.100,000.
(b) Sales of Tshs.250,000 to K. Haji had been debited in error to K. Hajri’s account.
(c) Rent account had been undercast by Tshs.70,000.
(d) Discounts received account had been undercast Tshs.300,000.
(e) The sale of motor vehicle at book value had been credited in error to sales account
Tshs.360,000.
(i)
(ii)
(iii)
Show the journal entries necessary to correct the errors. (narrations not required)
Draw up the suspense account after the errors described have been corrected.
If the net profit had previously been calculated at Tshs.7,900,000 for the year ended 31
December 2016, show the calculation of the corrected net profit.
QUESTION EIGHT
Show the journal entries necessary to correct the following errors:
a) A sale of goods Tshs.412,000 to T More had been entered in T Mone’s account.
b) The purchase of a machine on credit from J Frank for Tshs.619,000 had been completely
omitted from our books.
c) The purchase of a computer for Tshs.550,000 had been entered in error in the Office
Expenses account.
d) A sale of Tshs.120,000 to B Wood had been entered in the books, both debit and credit,
as Tshs.102,000.
e) Commission received Tshs.164,000 had been entered in error in the Sales account.
f) A receipt of cash from T Blair Tshs.68,000 had been entered on the credit side of the cash
book and the debit side of T Blair’s account.
g) A purchase of goods Tshs.372,000 had been entered in error on the debit side of the
Drawings account.
h) Discounts Allowed Tshs.48,000 had been entered in error on the debit side of the
Discounts Received account.
QUESTION NINE
Show the journal entries needed to correct the following errors:
a) Purchases Tshs.1,410,000 on credit from A Ray had been entered in B Roy’s account.
b) A cheque of Tshs.94,000 paid for printing had been entered in the cash column of the
cash book instead of in the bank column.
c) Sale of goods Tshs.734,000 on credit to D Rolls had been entered in error in D Rollo’s
account.
d) Purchase of goods on credit L Hand Tshs.819,000 entered in the correct accounts in error
as Tshs.891,000.
e) Cash paid to G Boyd Tshs.64,000 entered on the debit side of the cash book and the
credit side of G Boyd’s account.
f) A sale of fittings Tshs.320,000 had been entered in the Sales account.
g) Cash withdrawn from bank Tshs.200,000 had been entered in the cash column on the
credit side of the cash book, and in the bank column on the debit side.
h) Purchase of goods Tshs.1,182,000 has been entered in error in the Furnishings account.
QUESTION TEN
Kitwange extracted the following trial balance from the books of his business. He was unable to
get the totals to agree. So a suspense account was opened to record the difference.
Purchases and sales
Discounts allowed and received
Salaries and wages
General expenses
Fixtures
Inventory as at 1 July 2008
Accounts receivable and payable
Bank
Drawings
Kitwange ‘s
Trial Balance as at 30 June 2009
Dr
Tshs ‘000
62,400
305
3,168
595
10,000
12,490
8,120
6,790
4,520
Cr
Tshs ‘000
87,050
410
5,045
Capital
Suspense
17,017
1,134
109,522
109,522
The following errors were later found:
(i) The sales journal had been overcast by Tshs 350,000
(ii) Discounts allowed had been undercast by Tshs100,000.
(iii)Fixtures, bought for Tshs 850,000 had been entered in the cash book but not in the fixtures
account. (ignore depreciation)
(iv)A credit purchase of Tshs.166,000 had been entered in the purchases journal, but had not
been posted to the creditor’s account.
(v)A cheque payment of Tshs.490,000 to a creditor had been debited to the drawings account.
You are required to:
(a) Prepare the necessary journal entries to correct the above errors. (Narrations are not required.)
(b)Draw up the suspense account.
(c) Redraft the trial balance after all corrections have been made
QUESTION ELEVEN
The accountant CC Company extracted a trial balance as at 31 December 2020 but its totals did not
agree. An income
statement for the year ended 31 December 2020 was prepared and a net profit ofTshs 479,280,000
was shown. All the errors made in 2020 were discovered in the following year.
(i) Discounts ofTshs.840,000 allowed to a debtor, H Tong, had been posted to the wrong side of
the discounts allowed account.
(ii) The debit side of the rent account had been undercast byTshs.1,000,000.
(iii)A purchase invoice ofTshs.279,000 had been completely omitted from the books.
(iv) A total of Tshs.12,800,000 paid for wages had been incorrectly debited to the buildings
account.
(v)A receipt of dividend, Tshs.390,000 had been correctly entered in the cash book but nowhere
else.
(vi) A payment of Tshs.1,566,000 to a creditor, D Chen, had been entered in D Chan’s account.
(vii) A payment for motor expenses of Tshs.380,000 had been entered in the motor vehicles
account. Depreciation had been charged on motor vehicles at 10% per annum on cost.
(viii) Returns from customer amounting toTshs1,999,000 had been entered in the personal
accounts only.
(ix) A receipt of Tshs.940,000 from a debtor, C Bau, had been correctly recorded in the cash
book, but had been posted to her personal account as Tshs. 490,000.
(x)A petty cash balance of Tshs.116,000 had been omitted from the trial balance.
You are required to:
(a) Show the journal entries to correct the errors. (Narrations are not required.)
(b) Show the corrections in the suspense account.
(c) Calculate the correct figure of net profit for the year ended 31 December 2020.
QUESTION TWELVE
The trial balance of W Cheung’s business as at 31 December 2020 failed to agree and the difference
was recorded in a suspense account. After preparing the draft financial statements for the year, the
net profit for the year was calculated to be Tshs.102,450,000 while the working capital as at the end
of the year amounted to Tshs.28,320,000.
Subsequent check on the accounting books revealed the following errors:
(i) A credit sale of office equipment for Tshs.6,200,000 had been recorded in the sales day
book. The office equipment was acquired for Tshs.12,000,000 on 1 July 2007.
Depreciation was charged at 20% per annum on the cost of office equipment. A full year’s
depreciation was charged in the year of purchase, while no depreciation was charged in the
year of disposal.
(ii) The purchases daybook and the returns outwards day book had both been undercast by
Tshs.1,130,000.
(iii) Discounts received of Tshs.257,000 had been credited to the interest revenue account as
Tshs.275,000.
(iv) A bad debt recovery of Tshs.5,180,000 had been recorded in the cash book as a receipt from
cash sales. The bad debt was written off a year earlier.
(v) Carriage inwards of Tshs.3,870,000 had been credited to the returns inwards account as
Tshs.3,780,000.
(vi) A Cheque payment of Tshs.2,280,000 for electricity charges had been recorded twice in the
electricity account, but was omitted from the bank account.
Required:
(a) Prepare the necessary journal entries to correct the above errors.
(b) Show the necessary entries in the suspense account.
(c) Prepare a statement showing the adjustments to the net profit for the year.
QUESTION THIRTEEN
A trial balance for the year ended 31 December 2019 was prepared for a business. There was a
shortage of Tshs.2,920,000 in the credit total. A suspense account was opened for the difference.
During 2010, the following errors made in 2019 were located.
(i) An amount of Tshs.550,000 received from the sale of old office equipment (with a cost of
Tshs.4,600,000 and a zero net book value) had been entered in the sales account. No other
entries had been made.
(ii) The purchases daybook had been overcast by Tshs.600,000.
(iii)A private purchase by the owner of Tshs.1,150,000 had been included in business purchases.
(iv) Bank charges of Tshs.380,000 entered in the cash book had not been posted to the bank
charge account.
(v) A sale of good to C Chow amounting to Tshs.6,900,000 had been correctly entered in the
sales book but posted to the personal account as Tshs.9,600,000.
Required:
(a) Show the journal entries to correct the errors. (Narrations are not required.)
(b) Draw up the suspense account.
(c) The net profit for 2019 was originally calculated as Tshs.113,700,000. Recalculate the
correct figure and show the workings.
QUESTION FOURTEEN
The draft accounts of Mayflower Company for the year ended 30 September 2019 showed a net
profit of Tshs.68,437,000. Before the preparation of financial statements, there was a difference of
Tshs.2,670,000 in the trial balance. A suspense account was opened to record this. Subsequent
checking of the records revealed the following:
(i) The discounts allowed column in the cash book had been undercast by Tshs.1,270,000.
(ii) On 1 October 2018, a cash sale of office equipment for Tshs.16,240,000 had been recorded
as a cash sale of goods. No other entries in respect of this transaction had been made. This
piece of office equipment cost Tshs.36,000,000 and had an accumulated depreciation of
Tshs.28,800,000 as at 30 September 2019. The company had charged depreciation at a rate
of 20% on cost for office equipment appearing in the books as at 30 September 2019.
(iii)Accrued rent of Tshs.1,820,000 as at 30 September 2018 had not been brought forward as
an opening balance in the rent and rates account. Prepaid rates of Tshs.4,840,000 on 30
September 2019 had been completely omitted from the trial balance.
(iv) Included in the insurance account was a payment for private life insurance of Tshs.1,270,000
out of the business bank account.
(v)A cheque for Tshs.3,163,000 in respect of a bad debt written off in the previous year had
been banked but not yet entered in the books.
(vi) Accounts receivable were shown as Tshs.75,540,000 (gross). However, a bad debt of
Tshs.1,140,000 had not been written off. The existing allowance for doubtful accounts,
Tshs.2,200,000 should have been adjusted to 3% of accounts receivable.
(vii) The closing inventory had been overcast by Tshs.1,360,000.
(viii) A rebate of bank charges overpaid, Tshs.2,360,000 had been credited to the drawings
account.
(ix) In September 2019, Mayflower Company bought goods on credit from Rose Ltd for
Tshs.4,289,000 and sold goods on credit to the same company for Tshs.2,749,000. The
purchases were correctly recorded in the accounts, but the sales were recorded in Rose Ltd’s
account as Tshs.2,479,000. The two accounts of Rose Ltd were to be settled by a contra entry
on 30 September 2019.
(x)A credit note from a supplier, Sunny Ltd, for Tshs.1,890,000 had been entered correctly in the
relevant day book but had been posted twice to Sunny Ltd’s account.
Required:
(a) Show the journal entries necessary for recording the above. (Narrations are not required.
(b) Draw up the suspense account.
(c) Calculate the revised net profit for the year ended 30 September 2019.
QUESTION FIFTEEN
On 31 December 2019, a bookkeeper prepared a trial balance which failed to agree by
Tshs.3,300,000 with a shortage in the credit total. A suspense account was opened for the
difference.
In January 2020, the following errors made in 2019 were found:
(i) The sales daybook had been undercast by Tshs.1,000,000.
(ii) Sales of Tshs.2,500,000 to K Heung had been debited to K Hung’s account.
(iii) The debit side of the rent account had been undercast by Tshs.700,000.
(iv) The credit side of the discounts received account had been undercast by Tshs.3,000,000.
(v) The sale of a motor vehicle used in the business (cost Tshs.33,600) at a net book value of
Tshs.3,600,000 had been credited to the sales account. No other entries had been made.
Required:
(a) Show the journal entries necessary to correct the errors. (Narrations are not required.)
(b) Draw up the suspense account.
(c) If the net profit for the year ended 31 December 2019 had been calculated as Tshs.79,000,000
recalculate the correct figure and show the workings.