Preparing a trial balance

**Section A** Vertex Consulting pays its annual office rent of $24,000 in advance on 1 April each year. The company's financial year-end is 31 December. What is the correct adjustment required in the financial statements for the year ended 31 December 20X2?

**Section A** The payables ledger control account of Orion Supplies shows a balance of $45,600. The total of the individual supplier accounts in the payables ledger is $44,200. Which of the following errors could explain the difference?

**Section A** Nautilus Marine's cash book shows a debit balance of $12,400. The bank statement shows a credit balance of $11,800. Upon investigation, you discover: - Bank charges of $150 have not been entered in the cash book. - A cheque received from a customer for $800 was returned unpaid by the bank. - Unpresented cheques amount to $2,350. - Outstanding lodgements amount to $3,200. What is the revised cash book balance? (Enter numbers only)

**Section A** A trial balance failed to agree, and a suspense account was opened with a debit balance of $800. The following errors were subsequently discovered: 1. A cash payment of $300 for stationery was credited to the cash book but no other entry was made. 2. A sales invoice for $500 was completely omitted from the books. What will be the balance on the suspense account after these errors are corrected?

**Section A** Which of the following describes an 'error of principle'?

**Section A** Draft net profit for the year is $45,000. The following errors are discovered: 1. Closing inventory was undervalued by $3,000. 2. Depreciation of $1,500 was omitted. 3. A payment for rent of $1,000 was debited to the rent account as $100. What is the revised net profit after correcting these errors? (Enter numbers only)

A company's cash book shows a debit balance of $4,500. The bank statement shows a credit balance of $5,200. The difference is due to unpresented cheques of $1,200 and a bank charge of $50 not yet recorded in the cash book. What is the correct cash balance to be reported in the statement of financial position?

A supplier sends a statement showing a balance due of $3,400. Your payables ledger account for this supplier shows a credit balance of $2,900. Which of the following could explain the difference?

A trial balance fails to agree. The debit column totals $150,000 and the credit column totals $152,000. A suspense account is opened. It is later discovered that a cash payment of $1,000 for rent was credited to the cash book but no other entry was made. What is the journal entry to correct this error and clear the suspense account?

Which of the following describes an 'error of principle'?

A company's draft profit is $50,000. It is discovered that closing inventory was overstated by $5,000, and a depreciation charge of $2,000 was omitted. What is the revised profit?

A logistics company extracts a trial balance where total debits are $450,000 and total credits are $446,000. A suspense account is opened for the difference. It is later discovered that a cash payment of $2,000 for motor expenses was correctly entered in the cash book but completely omitted from the motor expenses account. What is the journal entry to correct this error and what is the remaining balance on the suspense account?

A construction company purchased new equipment for $15,000. The transaction was incorrectly recorded as a debit to the Repairs and Maintenance expense account and a credit to Cash. What type of error is this, and does it affect the trial balance agreement?

An e-commerce company's cash book shows a debit balance of $12,400. The bank statement shows a credit balance of $13,100. The difference is due to unpresented cheques of $1,500, uncleared lodgements of $2,500, and bank charges of $300 not yet entered in the cash book. What is the revised cash book balance? (Enter numbers only)

A hospitality business receives its bank statement showing an overdrawn balance of $4,200. The business discovers a direct debit for electricity of $400 has not been recorded in the cash book, and a customer's cheque for $600 has been returned unpaid (bounced). What is the correct double-entry to update the cash book for the returned cheque?

A consulting firm has a suspense account with a debit balance of $800. Which TWO of the following errors, when corrected, would completely clear this suspense account?

Section A HeavyForge Manufacturing extracted a trial balance that failed to agree. The debit column exceeded the credit column by $450. A suspense account was opened. It was later discovered that a cash sale of $890 was correctly entered in the cash book, but was recorded as $980 on the debit side of the sales account. What will be the balance on the suspense account after correcting this single error? (Enter the number only. If the balance is zero, enter 0).

Section A A bookkeeper correctly entered a $500 payment for motor repairs in the cash book, but debited the motor vehicles (asset) account instead of the motor expenses account. What type of error is this?

Section A Which TWO of the following errors would NOT cause the trial balance totals to disagree?

Section A A suspense account has a debit balance of $600. The following errors are discovered: 1. A payment for rent of $400 was credited to the bank but no other entry was made. 2. The sales day book was undercast by $200. What will be the balance on the suspense account after correcting these two errors? (Enter the number only. If the balance is zero, enter 0)

Section B - Case 2: Single Entity Accounts **Scenario: AquaHarvest Marine Farms** AquaHarvest prepares its financial statements for the year ended 30 September 20X6. The draft profit before adjustments is $120,000. Issue 1: A payment for marine insurance of $6,000 for the year ending 31 December 20X6 was recorded entirely as an expense in the P&L. Issue 2: Depreciation on harvesting equipment (Cost $80,000, Acc Dep $30,000) needs to be charged at 20% reducing balance. Issue 3: A customer went bankrupt owing $2,500. This needs to be written off. Issue 4: A suspense account has a $4,500 Credit balance because a cash receipt of $4,500 from a credit customer was only recorded in the cash book. Regarding Issue 4, what is the journal entry to clear the suspense account?

Section B - Case 2: Single Entity Accounts **Scenario: AquaHarvest Marine Farms** AquaHarvest prepares its financial statements for the year ended 30 September 20X6. The draft profit before adjustments is $120,000. Issue 1: A payment for marine insurance of $6,000 for the year ending 31 December 20X6 was recorded entirely as an expense in the P&L. Issue 2: Depreciation on harvesting equipment (Cost $80,000, Acc Dep $30,000) needs to be charged at 20% reducing balance. Issue 3: A customer went bankrupt owing $2,500. This needs to be written off. Issue 4: A suspense account has a $4,500 Credit balance because a cash receipt of $4,500 from a credit customer was only recorded in the cash book. Does clearing the suspense account (Issue 4) affect the draft profit?

Section B - Case 2: Single Entity Accounts **Scenario: AquaHarvest Marine Farms** AquaHarvest prepares its financial statements for the year ended 30 September 20X6. What is the primary purpose of preparing a trial balance before making these year-end adjustments?

Section A A retail chain's trial balance fails to agree. The debit column totals $450,600 and the credit column totals $452,100. A suspense account is opened. It is later discovered that a cash sale of $750 was completely omitted from the books, and a payment for rent of $1,500 was credited to the bank but no debit entry was made. What is the balance on the suspense account after correcting these errors?

Section A Blockchain Logistics Ltd has a debit balance of $12,500 on its bank statement. However, the cash book shows a credit balance of $11,200. The difference is due to unpresented cheques of $3,000 and an uncleared lodgement. What is the value of the uncleared lodgement?

Section A Which of the following errors would cause the trial balance totals to be unequal?

Section A A company's trial balance includes a suspense account with a credit balance of $800. The following errors are discovered: 1. A payment of $300 for electricity was debited to the electricity account as $30. 2. A sales invoice for $530 was completely omitted from the books. What will be the balance on the suspense account after correcting these errors?

Section B - Case 2 Scenario: EcoBuild Ltd is preparing financial statements for the year ended 30 September 20X6. Draft profit before tax is $450,000. Adjustments required: 1) A machine costing $120,000 bought on 1 April 20X6 was incorrectly expensed in full. Depreciation is 20% straight-line (pro-rata). 2) Closing inventory was undervalued by $15,000. 3) An allowance for receivables of $8,000 needs to be created. 4) Rent of $12,000 paid for the quarter ending 30 November 20X6 was fully expensed. What is the adjustment to the draft profit to correct the initial incorrect expensing of the machine (before calculating depreciation)?

Section B - Case 2 Scenario: EcoBuild Ltd is preparing financial statements for the year ended 30 September 20X6. Draft profit before tax is $450,000. Adjustments required: 1) A machine costing $120,000 bought on 1 April 20X6 was incorrectly expensed in full. Depreciation is 20% straight-line (pro-rata). 2) Closing inventory was undervalued by $15,000. 3) An allowance for receivables of $8,000 needs to be created. 4) Rent of $12,000 paid for the quarter ending 30 November 20X6 was fully expensed. What is the net impact of adjustment 1 (the machine correction and depreciation) on the draft profit?