Razia's financial year ends on 30 September. The totals of the trial balance on 30 September 2020 did not agree. The totals were debit $10450 and credit $10250. A suspense account was opened. The following errors were later discovered. 1 The total of the sales returns journal had been overcast by $300. 2 Cash sales, $820, had not been recorded in the books of account. 3 A purchase invoice, $190, had been credited to the account of P Hill instead of D Hill. 4 A cheque payment, $240, for motor repairs had been correctly entered in the cash book but had been posted to the debit of motor repairs account as $420. 5 Rent received, $310, had been debited to the rent payable account. 6 Staff wages, $250, had been posted to Razia's drawings account. 7 A cheque paid, $900, to Kamil, a credit supplier, had been entered correctly in the cash book but had not been posted to Kamil's account. REQUIRED

1. (a)Prepare the suspense account. Start with the balance arising from the difference on the trial balance. The account should be balanced or totalled as necessary. Razia Suspense account Date | Details | $ | Date | Details | $ --- | --- | --- | --- | --- | ---[6]
2. (b)Identify the types of error made in Error 2 and Error 4. Error | Type of error --- | --- 2 | 4 | [2]
3. (c)Complete the table by placing a tick (✔) in the correct column to indicate the effect on the profit for the year of correcting each error. Error number | Increase profit | Decrease profit | No effect on profit --- | --- | --- | --- 1 | | | 2 | | | 3 | | | 4 | | | 5 | | | 6 | | | 7 | | | [7]
4. (d)Razia is considering whether or not she should sell on cash terms only. REQUIRED Advise Razia whether or not she should sell on cash terms only. Justify your answer with two advantages and two disadvantages of selling on cash terms only.[5]