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Correction of errors booklet

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Correction of errors booklet Powered By Docstoc
					Activity Sheet Number Task Name                Check?
Activity Sheet 1     Jimmy McError
Activity Sheet 2     Smythys Errors
Activity Sheet 3     Past Paper 1 Int 2
Activity Sheet 4     Eric’s Errors
Activity Sheet 5     Past Paper 2 Int 2
Activity Sheet 6     MacLeod’s Errors
Activity Sheet 7     Past Paper 3 Int 2
Activity Sheet 8     Heather’s Errors Higher
Activity Sheet 9     Past Paper 4 Higher
Activity Sheet 10    Chelsea’s Fixers Higher
Activity Sheet 11    Past Paper 5 Higher
Following the preparation of the Trial Balance for the Sole Trader Jimmy McError for
the year ended 31 July Year 2 the following errors were discovered. An appropriate
entry was made in the Suspense Account to balance the books.

1. Furniture bought by cheque costing £2,500 had been completely omitted.

2. Goods sold to Jim Hughes for £1,500 cash had been completed omitted

3. Payment to J Weir of £2,000 by cheque had been recorded in both accounts as
£3,000

4. An Invoice Sent to K James for £200 was debited to K Jameson account by mistake

5. An Invoice for Advertising of £500, paid by cheque had been debited in the
advertising account and debited in the bank account by mistake.

6. Sales has been over added by £3,400




(a) Show how these errors would be corrected in the books of Jimmy McError. The
first error has been done as an example.



Error No            Account to be Debited             Account to be Credited

Example 1           Furniture £2,500                  Bank £2,500
Following the preparation of the Trial Balance for the Sole Trader Smythy for the year
ended 31 July Year 2 the following errors were discovered. An appropriate entry was
made in the Suspense Account to balance the books.




1. A Vehicle bought by cheque for £3,000 had been completely omitted.

2. Goods of £2,700 sold for cash had been completed omitted

3. Wages paid by cheque of £300 had been completely omitted.

4. The sales figure of £2700 was wrong and should have been £2,000

5. Electricity paid my cheque for £200 had been debited in the Electricity account and
the Bank account

6. Internet fees of £150 by cash had been completely omitted.

7. The internet fees were recorded wrongly and should only have been £100

8. Sales of goods for £400 cash had been Credited in the Sales and the Cash account

9. Sales to L Hurles has been over added by £3,000

10. Rent and Rates of £2000 paid by cheque had been debited in the Rent and Rates
and the Bank Account



(a) Show how these errors would be corrected in the books of Smythy. The first error
has been done as an example.


Error No            Account to be Debited              Account to be Credited

Example 1           Vehicle £3,000                     Bank £3,000
2009 Int 2

Following the preparation of the Trial Balance for the partnership of Grant and Adam
for the year ended 30 June Year 3, the following errors were discovered. An
appropriate entry was made in the Suspense Account to balance the books.

1 Office equipment bought by cheque costing £1,200 had been completely omitted.

2 Repairs to Adam’s personal vehicle costing £500 had been entered in the
partnership’s Vehicle Repairs Account.

3 Discount Received of £1,200 had been entered as Discount Allowed.

4 Payment to MacGregor Supplies of £2,400 by cheque had been recorded in both
accounts as £4,200.

5 Sales had been overadded by £3,250.

(a) Using the worksheet provided show how these errors would be corrected in the
books of Grant and Adam. The first error has been done as an example.


Error No            Account to be Debited              Account to be Credited

Example 1           Office Equipment £1,200            Bank £1,200
Eric Banner has calculated that he should have £600 in his business Bank Account at 31
December Year 2. However, the closing balance in his Bank Statement is £1145.

When he compares the 2 documents he discovers the following.

(1) Cheques recently received by the business to the value of £200 have been entered
in Eric’s Bank Account but do not appear in the Bank Statement.

(2) The following items do not appear in the Bank Account

• Bank Charges of £25
• A Standing Order paid to Esporta for £50
• Income from Investments for £200

(3) A cheque received from C MacLeod for £150 had been entered in the Bank Account
as £130.

(4) Cheques recently paid by Eric to the value of £600 do not appear in the Bank
Statement.

(a) Update Eric’s Bank Account at 31 December Year 2.

(b) Prepare a Bank Reconciliation Statement as at 31 December Year 2.
2008 Int 2

Antonio Tiero, a sole trader, has calculated that he should have £450 in his business
Bank Account at 31 December Year 2. However, the closing balance in his Bank
Statement is £456.

When he compares the 2 documents he discovers the following.

(1) Cheques recently received by the business to the value of £300 have been entered
in Tiero’s Bank Account but do not appear in the Bank Statement.

(2) The following items do not appear in the Bank Account
• Bank Charges of £45
• A Standing Order paid to IBA Insurance for £80
• Dividends received from Investments for £100

(3) A cheque received from Andrew Ford for £112 had been entered in the Bank
Account as £121.

(4) Cheques recently issued by Tiero to the value of £400 do not appear in the Bank
Statement.

(5) A cheque received from D Sinclair for £60 and entered in the Bank Account had
been returned by the Bank as the customer had insufficient funds.

(a) Update Tiero’s Bank Account at 31 December Year 2.

(b) Prepare a Bank Reconciliation Statement as at 31 December Year 2.
Mr MacLeod completed the Trial Balance for his business for the month of July and
discovered the following errors.

(1) A cheque for £100 paid to H Haggarty had been correctly entered in the Bank
Account only.

(2) Repairs to the Premises of £300 had been debited to the Premises Account

(3) Electricity of £400 had been debited to the Electricity Account as £300 but
correctly entered in the Bank Account.

(4) Sales of £1,000 cash had been correctly entered in the Sales Account but recorded
as £500 in the cash account

(5) Discount Received of £100 had been debited to Discount Allowed Account.

(6) Purchases of £300 had been correctly entered in the Purchases account but left
out of the bank account.

(a) For each of the above errors state:

(i) Whether the Trial Balance totals will agree and then if the answer is no
(ii) Whether the Debit total will be higher and by how much?
or
Whether the Credit total will be higher and by how much?

(b) If MacLeod entered the total difference in a Suspense Account in order to make
the Trial Balance agree:

(i) On which side would the entry be?
(ii) What would the value of the entry be?

(c) For errors (2) and (3) above, state the accounts and amounts to be debited and
credited in order to correct each error.
2007 Int 2

M. McNaught completed the Trial Balance for her business for the month of April and
discovered the following errors.

(1) A cheque for £85 paid to C. Beech had been correctly entered in the Bank Account
only.

(2) Discount Received of £150 had been debited to Discount Allowed Account.

(3) Repairs to Machinery costing £540 had been debited to Machinery Account.

(4) Rent of £720 had been debited to Rent Account as £270 but correctly entered in
the Bank Account.

(5) An error in the addition of the Sales Account had resulted in the total of the
account being £100 too high.

(a) For each of the above errors state:

(i) Whether the Trial Balance totals will agree and then if the answer is no
(ii) Whether the Debit total will be higher and by how much?
or

Whether the Credit total will be higher and by how much?

(b) If McNaught entered the total difference in a Suspense Account in order to make
the Trial Balance agree:

(i) On which side would the entry be?
(ii) What would the value of the entry be?

(c) For errors (2) and (3) above, state the accounts and amounts to be debited and
credited in order to correct each error.

(d) Explain what is meant by the terms “revenue expenditure” and “capital expenditure”
and give 2 examples of costs which belong to each category.
After the appropriation of the Net Profit was found to be £30,000, the following
errors and omissions were found in the books of Heather’s Errors.

(1) A sales invoice for £2,000 had been wrongly entered as £3,000.

(2) Discount Received of £500 had been entered as Discount Allowed.

(3) Electricity had been underadded by £700.

(4) No entry had been made for the sale of goods for £1,200

(5) Stock value at £250 had been omitted from Closing Stock.

(6) The figure for Rent and Rates was recorded as £2500 when it was actually £250

(a) Calculate:

(i) The amended Net Profit figure;
2009 Higher

After the appropriation of the Net Profit was found to be £18,000, the following
errors and omissions were found in the books of the partnership.

(1) A sales invoice for £320 had been wrongly entered as £240.

(2) No entry had been made for the sale of a vehicle (net book value – £1,600) for
£1,200.

(3) Wages had been underadded by £1,500.

(4) Discount Received of £100 had been entered as Discount Allowed.

(5) Stock value at £400 had been omitted from Closing Stock.

(6) VAT of £300 had been omitted on Purchases.

(c) Calculate:

(i) The amended Net Profit figure;
Gross Profit                     £100,000

Net Profit                       £40,000



An audit of the figures for Year 2 revealed the following errors.

(1) Purchases Returned had been over added by £200.

(2) Wages had been over added by £500

(3) Stock valued at £2,000 had been omitted from the closing stock.

(4) A sales invoice for £300 had been wrongly entered as £3,000.

(5) Discount Allowed of £100 had been entered as Discount Received.

(6) Electricity has been under added by £350



(a) Calculate the new figures for Gross Profit and Net Profit before Tax for Year 2
following the correction of the above errors.
Gross Profit                     £60,000

Net Profit                       £44,000



An audit of the figures for Year 2 revealed the following errors.

(1) A sales invoice for £234 had been wrongly entered as £324.

(2) Purchases Returned had been over added by £100.

(3) Discount Allowed of £60 had been entered as Discount Received.

(4) Wages had been under added by £300

(5) Stock valued at £1,200 had been omitted from the closing stock.

(6) Payment of £200 by cheque to a creditor had been treated as £200 received from
a debtor.

(e) Calculate the new figures for Gross Profit and Net Profit before Tax for Year 2
following the correction of the above errors.

				
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