1.

Correct the cash book

£
Uncorrected cash book balance (4,270)
Less: Bank charge (30)
Less: Local property tax (300)
Corrected cash book balance (4,600)

2. Reconcile corrected cash book with bank statement

£
Balance per bank statement (5,800)
Add: Outstanding lodegements 1,300
Less: Bank error (100)
Corrected bank statement balance (4,600)

Pink
Statement of profit or loss
For the year ended 31 May 20X7
Net loss before (22,000)
Bank charges (30)
Local property tax (300)
Repairs expense (2000)
COGS (1000)
Irrecoverable debts expense 500
Purchase 77
Net loss at the end of period (24,753)
No Accounts Debit
1 Bank charge 30
Cash
2 Local property tax 300
Cash
5 Repair expense 2,000
Machinery
6 Trade receivable 500
Irrecoverable debts expense
7 Cost of goods sold 1,000
Inventory
8 Trade payables 25
Suspense account 52
Purchase account
Credit

30

300

2000

500

1000

77
 Explanation
Bank charges not recorded in cash at bank account

Local property tax not entered in cash at bank account

Repairs had been incorrectly recorded as a purchase of machinery

Cash received in respect of a debt written off many years ago, had been credited to receivables.

Closing inventory includes items were sold and delivered to the customer

Goods invoiced at £25 had been returned by Pink, debit the purchases account and credit the suspense account with £