Autumn 2017 Accounting Unit 1

Past Paper WAC01 or WAC11

2 Marvan extracted a trial balance on 31 August 2017. The trial balance failed to
balance so Marvan opened a Suspense Account to record the difference.
On inspection of the books and draft financial statements, Marvan discovered the
following errors:
Cr

revenue,
(1) The Sales Day Book had been under-cast by £3 250
suspense
so
ago

Dr

(2) Purchases on credit from Gayesha of £850, had been recorded in the ledger
Ginan

account of Gihan.
Gayeska
8 50 858

(3) On 31 August 2017, a page from the inventory count (stock-take), for a total of
£900, had been omitted.
SOF SOPL(C.0.S)
900 900

dis allowed suspense

Expense(Dr)
(4) Discount allowed of £280 had been credited to the Discount Allowed Account. 280

280
568

prepaid expense (currentassett I month 1000

(5) Rent of £6 000 had been paid for the period 1 May - 31 October 2017. The
=

full amount had been charged to the Statement of Profit or Loss and Other
Comprehensive Income. 2 months
SOPL (expense l SOFP (asset
prepaid
2004 2000

Dr

(6) Telephone expenses of £750 had been correctly recorded in the Bank Account but tele

had been recorded in the Telephone Expenses Account as £570

expense suspense
570 188

750

(7) The purchase of a new computer, £5 000, had been recorded in the Computer
Expenses Account. Depreciation was charged on computers at the rate of 25% per
annum using the straight line method. Dep* computer expense
S 000
computer
5000
income state
1250
provision for

1250

Required
(a) Identify which of the above errors could be corrected by using the Suspense
Account.
1,4,6,7
(3)
(b) Prepare the journal entries to record the correction of all errors.
Narratives are not required.
(16)
(c) Prepare the Suspense Account after the correction of all errors, showing the
opening balance.
(5)

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 Date Detail $ $
2017
Aug - 31 Suspense AIC 3250

Revenue AIC 3250

Gihan AIC 350

Gayesha AIC 950

SOFP 900

SOPL 900

discountallowed 560

Suspense AIC 560

SOFP (asset ( 2000

SOPL (expensel 2000

telephone expense AIC 190

suspense AIC 180

computer AIC 500D

computer expense AIC 500D

income statement 125

provision for Dep 1250

Suspense AIC

Date Detail $ Date Detail $

2017 2017
Aug. 31 revenue AIC 3250 Aug. 31 discountallowedAIC 560

telephone expense AIC 190

balance eld 2510

3253 3250

Sep. I balance bid 2510

Autumn 2017 Accounting Unit 1
Past Paper WAC01 or WAC11

On the 31 August 2017, the following balances were recorded in the ledger before
the correction of errors.
Inventory Account £41 600
Discount Allowed Account £1 320
Computer Expenses Account £12 300
Required
(d) Prepare the following corrected ledger accounts:
(i) Inventory Account
(3)
(ii) Discount Allowed Account
(3)
(iii) Computer Expenses Account.
(3)
Although the trial balance had failed to balance, Marvan prepared draft financial
statements that showed a draft profit for the year of £23 350
(e) Calculate the revised profit or loss for the year after the correction of all errors by
completing the table in your Question Paper.
(10)
(f ) Evaluate the usefulness of preparing draft financial statements when it is known
that there are errors in the books.
(12)

(Total for Question 2 = 55 marks)

TOTAL FOR SECTION A = 110 MARKS

7
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 Inventory AIC

Date Detail $ Date Detail $

2017
Aug. 31 balance bid 41600

error (SOFP) 900

balance cla 42500

42508 42500

2017
Balance bid 42500
Sep. 1

Es
Discount allowedAIC

Date Detail $ Date Detail $

2017
Aug. 31 balance cld 1320

Suspense AIC 550

balance cla 1880

1980 1980

Sep. 1 balance bid 1898

Computer Expense AIC

Date Detail $ Date Detail $

2017
Aug. 31 balance bid 12300
computer AIC 5000
balance eld 7300

12300 12300

2017
balance bid 7300
Sep. 1
Autumn 2017 Accounting Unit 1
Past Paper WAC01 or WAC11

Although the trial balance had failed to balance, Marvan prepared draft financial
statements that showed a draft profit for the year of £23 350
(e) Calculate the revised profit or loss for the year after the correction of all errors by
completing the table.
(10)

Draft profit for the year 23 350

Increase Decrease

£ £

(1) The Sales Day Book had been under-cast 3258 3250
by £3 250
(2) Purchases on credit from Gayesha £850,
850
had been recorded in the ledger account (850) -

of Gihan.
(3) On 31 August 2017, a page from the
inventory count (stock-take), for a total of 900 900
£900, had been omitted. closing c.0.St
closing ↑,

p4
expense
(4) Discount allowed of £280 had been (560) (560)
credited to the Discount Allowed Account.
(5) Rent of £6 000 had been paid for the
period 1 May – 31 October 2017. The full
sum had been charged to the Statement 2000 2000.
of Profit or Loss and Other Comprehensive
Income.
(6) Telephone expenses of £750, had been
correctly recorded in the Bank Account 570 (750)
(180)
but had been recorded in the Telephone
Expenses Account as £570
(7) The purchase of a new computer,
£5 000, had been recorded in the
Computer Expenses Account. 5000 1250) 3750
Depreciation was charged on computers
at the rate of 25% per annum using the
straight line method.

Sub total 12570 13410) 9160

Revised profit for the year 32510

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