CHP 3.

2 CORRECTION OF ERRORS

(a) Journal entries

Dr Cr
Purchases 220
Suspense 220
Purchases journal undercast.

Sales 630
Suspense 630
Sales entered as $700 instead of $70.

Motor vehicle 1,000

Capital 1,000
Value of car brought into the business by
Ander.

Office expenses 462

Suspense 462
Office expenses wrongly credited to
account.

(b) Suspense account

 Date Details $ Date Details $
Balance b/d 1,312 Purchases 220
Sales 630
Office expenses 462
1,312 1,312

(c) Statement of corrected profit

$ $
Profit before adjustments 2,114

Adjustments:
Purchases undercast -220
Sales overcredited -630
Office expense wrongly credited -462
-1,312
Profit after adjustments 802

(d) Effect on the assets in the statement of financial positon after the errors
have been corrected:
Non-current assets
Motor vehicle – car increased by $1,000