A business prepared a trial balance that included a suspense account. Draft financial statements were prepared which showed a profit for the year of $85 000.
The following errors were then discovered.

1 Discounts allowed of $1000 had been debited to the discounts received account.
2 Motoring expenses of $4000 had been debited to the purchases account.
3 A payment for purchases of $5000 had been correctly entered in the cash book but credited to the drawings account.

After correcting these errors the balance on the suspense account was eliminated.
What was the revised profit for the year?

Question

A business prepared a trial balance that included a suspense account. Draft financial statements were prepared which showed a profit for the year of $85 000.
The following errors were then discovered.

1 Discounts allowed of $1000 had been debited to the discounts received account.
2 Motoring expenses of $4000 had been debited to the purchases account.
3 A payment for purchases of $5000 had been correctly entered in the cash book but credited to the drawings account.

After correcting these errors the balance on the suspense account was eliminated.
What was the revised profit for the year?

Oracle Prep · Accepted Answer

The correct answer is C: $80 000

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