Test 1

4. The trial balance of Eddy Ltd as at 31 March 2007 showed a difference which was posted to a suspense account. The following
omissions/errors were subsequently found:
(i) The purchases day book had been overcast by $57,000.
(ii) The petty cash balance of $1,300 was omitted from the trial balance.
(iii) A cash receipt of $3,650 from Mr Tsui, a customer, had been correctly entered in the cash book, but posted to his account
as $6,350.
(iv) The repairs to a printer of $850 had been debited to the office equipment account.
(v) A credit note for $5,200 issued to Mr Yip, a customer, had been posted to the wrong side of his account.
(vi) Depreciation on office equipment of $9,400 for the month of March 2007 had not been recorded.
(vii) Advertising expenses of $3,100 had been correctly entered in the cash book, but the other side of the double entry was
omitted.
Required:
(a) Show the journal entries required to correct the above omissions/errors. (Narratives are not required.)
(b) Prepare the suspense account, incorporating as appropriate any adjustments shown in the journal entries in (a).

Journal
Details Dr Cr
$ $
(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(b)
Suspense
2007 $ 2007 $

Test 2
T Sung extracted the following trial balance from the books of his business. He could not get the totals to agree. So a suspense
account was opened to record the difference.
T Sung
Trial Balance as at 31 December 2009
Dr Cr
$ $
Capital 25,621
Drawings 13,690
Sales 94,630
Purchases 60,375
Returns inwards and outwards 1,210 1,109
Wages and salaries 14,371

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Sundry expenses 598
Inventory as at 1 July 2008 8,792
Accounts receivable and payable 11,370 4,290
Loan from J Chen 5,000
Equipment 16,000
Accumulated depreciation: Equipment 6,000
Bank 5,790
Suspense 1,546
138,196 138,196
The following errors were later discovered:
(i) The purchases journal had been overcast by $258.
(ii) A loan repayment of $2,000 had been debited to the wages account.
(iii) A cheque payment of $1,500 for the purchase of equipment had been entered in the equipment account but not in the bank
account.
(iv) Returns outwards of $168 had been entered in the returns outwards journal but had not been posted to the creditor ’s
account.
(v) Sundry expenses of $44 had been entered in the cash book but had not been posted to the sundry expenses account.

You are require 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.
(d) Explain the functions of a suspense account.

(a)
Journal
Details Dr Cr
$ $
(i)

(ii)

(iii)

(iv)

(v)

(b)
Suspense
$ $

(c)
T Sung
Trial Balance as at 31 December 2009
Dr Cr
$ $

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(d)

Test 3
The accountant at NPA Company found that the trial balance as at 31 March 2010 did not balance. He entered the difference in a
suspense account. The income statement was then prepared showing a net profit of $65,200 for the year ended 31 March 2010.
The accountant later found the following errors:
All the errors made in 2010 were discovered in the following year.
(i) Credit sales of $9,600 and credit purchases of $4,320 were omitted from the books.
(ii) An amount of $4,000 for the purchase of a van for the private use of the owner had been debited to the vans account.
Depreciation had been charged on vans at 10% per annum on cost.
(iii) Discounts allowed amounting to $600 had been correctly posted to the individual debtor’s accounts but credited to the
discounts allowed account.
(iv) The purchase of new machinery costing $6,000 had been debited to the repairs to machinery account. Depreciation was to be
charged on machinery at 25% per annum on cost.
(v) A payment of $680 for rent and rates had been correctly entered in the cash book but credited to the rent and rates account.
(vi) An accrual of $960 for wages and a prepayment of $800 for stationery had been ignored in the preparation of the financial
statements.
You are required to:
(a) Prepare journal entries to correct the above errors. (Narrations are not required.)
(b) Draw up a suspense account, showing the original balance.
(c) Prepare a statement to correct the draft net profit for the year ended 31 March 2010.

(a)
Journal
Details Dr Cr
2010 $ $
(i)

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(ii)

(iii)

(iv)

(v)

(vi)

(b)
Suspense
2010 $ 2010 $

(c)
Statement of Corrected Net Profit for the year ended 31 March 2010
$ $

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Test 4
The trial balance of Gobo Ltd as at 31 December 2006 showed a difference which was posted to a suspense account. The working
capital as at the end of the year amounted to $20,000 and the following omissions/errors were subsequently found:
(i) The repairs to a photocopier of $2,000 had been debited to the office equipment account.
(ii) The purchases day book had been undercast by $42,000.
(iii) Goods of $9,810 returned to a supplier had been recorded as $8,190 in the returns outwards account.
(iv) Cash $2,430 from Dolly Ltd, a customer, had been correctly entered in the cash book but posted to its account as $4,320.
(v) Channel Ltd, which owed $6,700 to the company, went into liquidation. It was decided that the debt would be written off.
(vi) Discounts allowed of $2,870 had been credited to the discounts allowed account as $287.
(vii) A petty cash balance of $1,600 had been omitted from the trial balance.
Required:
(a) Write up the journal entries required to correct the above omissions/errors. (Narratives are not required.)
(b) Prepare a suspense account, incorporating as appropriate any adjustments shown in the journal entries in (a) above.
(c) Prepare a statement showing the adjustments to the working capital as at the end of the year.
(d) State a function of a suspense account.

(a)
Journal
Details Dr Cr
$ $
(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

(b)
Suspense
2006 $ 2006 $

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(c)
Statement of Corrected Working Capital as at 31 December 2006
$ $

(d)