Correction of errors

May 2014

Rakib’s bookkeeper prepared the following Trial Balance at 30 April 2014. Rakib identified errors
in both the Trial Balance preparation and the information from which it had been prepared.

Trial Balance at 30 April 2014

Dr Cr
£ £
Purchases 70 550
Revenue 150 000
Trade receivables 9 980
Trade payables 6 750
Rent 4 500
Bank overdraft 1 500
Other expenses 8 390
Wages 50 000
Discount allowed 900
Discount received 1 570
Non-current assets (at cost):
Equipment 16 000
Motor vehicles 26 000
Provisions for depreciation:
Equipment 8 000
Motor vehicles 20 000
Inventory 1 May 2013 8 610
Capital 10 000
218 800 173 950

The following errors were subsequently found:

(1) Purchases of £3 800 from Titan Supplies had been received on 20 April 2014. No entries had
been made in the books.
(2) The Sales Day Book had been over-cast by £2 400.
(3) A payment of £900 to Patil, a creditor, had been posted to the account of Batik.
(4) Other Expenses of £300 had been debited to the Equipment Account.
(5) Discount received of £470 had been correctly entered in the Cash Book, but had been debited
to the Discount Received Account.
(6) A payment of £850 for rent had been entered on the credit side of the Rent Account as £580
but entered correctly in the Cash Book.
(7) A motor vehicle with a cost of £14 000 and accumulated depreciation of £11 200 was sold
with a cheque received for £4 000. No entries had been made in the books.
Requirement
(4)
(a) (i) Explain the difference between an error of commission and an error of principle.

(ii) Identify one error from (1) to (7) which is an example of an:
• Error of commission
• Error of principle.
(2)

(b) Prepare the Journal entries to correct the errors (1) to (7). Narratives are not required.
(18)

(c) Prepare the corrected Trial Balance at 30 April 2014.

(20)

(d) Evaluate the usefulness to a business of preparing a trial balance.

(8)

(Total 52 marks)
 January 2015

The following ledger account was recorded in the books of Downtown Traders at
30 November 2014.

Petrus Account
2014 £ 2014 £
1 Nov Balance b/d 6 000 5 Nov Bank 5 850
5 Nov Discount allowed 150 19 Nov Sales returns 530
18 Nov Sales 3 000 30 Nov Balance c/d 5 170
23 Nov Sales 2 400
11 550 11 550
1 Dec Balance b/d 5 170
On inspecting of the books, the following errors were discovered in the account of Petrus:

1. On 5 November Petrus had paid the balance of his account and had deducted
2½% cash discount which had been credited to the discount allowed account.

2. A trade discount of 15% should have been deducted from the sales made on
18 November.

3. The sales returns on 19 November were correctly recorded in the Sales Returns
Account as £350, but were recorded in Petrus’s Account as £530.

4. The sales recorded on 23 November were sales made to Potter and Co, which
had been incorrectly posted to the account of Petrus.
5. A refund of £50, for overpayment, was made to Petrus by cheque on
28 November, but no entries had been made in the books.

Required:

(a) Prepare the Journal entries to correct the errors in (1) to (5) above. Narratives are
not required.
(10)
(b) Update the Petrus Account in the books of Downtown Traders after the correction
of all errors.
(10)

(c) Name and explain four types of error that would not be revealed by a trial
balance.
(8)
(d) Evaluate the use of a suspense account when preparing a trial balance.
(4)
 May 2015

Andreas extracted a trial balance on the 31 March 2015 which failed to agree. He then
prepared a Draft Statement of Comprehensive Income. After preparation of the Draft
Statement of Comprehensive Income the following balances remained in the books:
Dr Cr
£ £
Profit for the year 9 680
Wages accrued 500
Heat and light accrued 590
General expenses prepaid 750
Computer maintenance accrued 350
Provision for doubtful debts 2 300
Non-current assets (at cost):
Leasehold on buildings 100 000
Computers 24 000
Fixtures and fittings 12 500
Provisions for depreciation:
Leasehold on buildings 50 000
Computers 14 000
Fixtures and fittings 10 000
Trade receivables 31 800
Trade payables 27 500
Inventory 31 March 2015 16 100
Cash and bank 1 990
Capital 75 000
Suspense 2 780
189 920 189 920

On inspection of the books, Andreas found the following errors:

1. Wages of £1 250 had been entered correctly in the Wages Account, but had been
recorded in the Bank as £2 150.
2. Discount allowed £940 had been credited to the Discount Allowed Account.
3. The Leasehold on buildings is a 25 year lease, no depreciation had been charged
in the Statement of Comprehensive Income.
4. A new computer costing £1 600 had been posted to the Computers Maintenance
Account. Depreciation of 25% of cost per annum had not been charged in the
Statement of Comprehensive Income.
5. A cheque receipt of £480 from a debtor, Fung, had been omitted from the books.
Required:
(a) Prepare the:

(i) Journal entries to correct the errors (1) to (5). Narratives are not required
(12)
(ii) Suspense Account after the correction of the errors (1) to (5).
(4)
(b) Calculate the profit for the year after the correction of all errors.
(10)
(c) Prepare the Statement of Financial Position at 31 March 2015, after the correction
of all errors.
(18)
(d) Evaluate the usefulness of draft financial statements, before the correction of
errors.
(8)

(Total for Question 2 = 52 marks)

 May 2016 (old syllabus)

Waban prepared draft financial statements for the year ended 31 March 2016, which
showed a draft profit for the year of £43 750. His draft financial statements were
prepared by a Trainee Accountant. The trial balance failed to agree and contained
ledger accounts with the following errors:
(1) Cash sales of £850 had not been recorded in the books.

(2) A purchase invoice for £490 had been correctly recorded in the account of Chitta
Products, but had been recorded in the Purchases Day Book as £940.

(3) A motor vehicle, purchased during the year for £8 000, had been debited to the
Motor Expenses Account. Depreciation on the motor vehicle should have been
charged at the rate of 25% using the straight line method.
(4) Interest receivable, £630, was correctly entered in the Cash Book, but had been
debited to the Interest Receivable Account.
(5) Electricity supplied by Dalha Electric, £345, had been recorded in the Electricity
Account and Dalha Electric Account as £145.

(6) No debit entry had been made for general expenses of £65.

(7) The debt of Habib, £4 100, was now considered irrecoverable. No entries had
been made in the books.
(8) Purchases returns to Taj, £85, had been entered in the account of Raj.

Required:
(4)
(a) Briefly explain two actions that Waban could take when his trial balance failed
to balance.

(b) Prepare the Journal entries to correct the errors in (1) to (8) above. Narratives are
not required.
(18)
(c) Prepare the Suspense Account showing the original difference in the trial balance
on 31 March 2016.
(4)
(d) Starting with the draft profit for the year of £43 750, calculate the revised profit
for the year showing the effect of each error.
(18)
(e) Evaluate preparing draft financial statements from books containing errors.
(8)
 Oct 2016 (old syllabus)

The following trial balance for Puteri was prepared by an inexperienced bookkeeper
on 31 August 2016. The trial balance was incorrectly drafted and further errors were
discovered requiring correction by journal entries.
Puteri
Trial balance at 31 August 2016
Dr Cr
£ £

Revenue 100 000

Purchases 52 000
Returns outward 4 600
Returns inward 7 500
Discount allowed 8 600
Discount received 5 200
Wages 33 900
General expenses 14 350
Capital 20 000
Drawings 6 500
Bank overdraft 8 000
Trade receivables 10 350
Trade payables 19 300
Computers 35 000
Computers – provision for depreciation 000 000 15 200

166 600 173 900

Required:

(a) Name and explain three types of error that would not be revealed by a trial
balance. (6)
(b) Redraft the trial balance placing the difference in a Suspense Account.
(10)
The following errors were discovered requiring correction by journal
entries:

(1) Purchases of £6 300 had been recorded in the day book as £3 600

(2) Discount received of £600 had been posted to the debit side of the Discount
Allowed Account. The entry in the cash book was correct.

(3) Drawings of £2 500 have been entered in the Wages Account.

(4) A payment to Ning, a supplier, of £1 750, had been correctly entered in the
Bank Account, but no entry had been made in the account of Ning.

(5) A payment by cheque for general expenses of, £730, had the entries reversed in the

books.
(6) Sales of goods to Wei of, £850, had been recorded in the Revenue Account, but

no entry had been made in the account of Wei.

(7) In August, Puteri sold a computer for £2 000, which had cost £11 000. Payment was
made by cheque. At the date of the disposal the accumulated depreciation was £7 800.
No entries had been recorded in the books

Required:
(c) Prepare the:

(i) journal entries to correct the errors (1) to (7). Narratives are not required
(19)
(ii) Suspense Account after the correction of all errors.
(5)
(d) Prepare the Computer Disposal Account including the end of period transfer.
Q1

The following errors were found in the books of Corona.

1. The owner took $200 cash for personal use. No entries were made.
2. Rent $75 was debited to insurance account.
3. Rent $50 was debited to motor vehicles account.
4. Purchased goods for cash $150. This is recorded in both the accounts as $140.
5. Sold goods by cheque $125. This has been debited to sales account and
credited to bank account.
6. Purchases account and sales account both were overcast by $40.

Requirement

1. Record the journal entries required to correct the above errors.

Narratives are required.
2. If the Draft profit for the year was $1500, calculate the revised profit for the year.

Q2

The following errors were found in the books of Virus

1. Purchases account was overcast by $50.

2. Paid electricity by cash $35. This is recorded only in cash account.
3. Purchased goods from Tom $45. This is recorded only in purchases account.
4. Sales account was undercast by $75.
5. The owner took $25 by cheque for personal use. This was debited to both the
accounts.
6. Cash sales $65 was correctly recorded in sales account but was entered in
the cash account as $85.

Requirement:

1. Record the journal entries required to correct the above errors.

Narratives are not required.
2. Prepare the Suspense account.

3. If the Draft profit for the year was $4000, calculate the revised profit for the year