O-LevelAccountingVerification of accounting records7707/21 · Oct/Nov 2015 · Q220 Marks

Martino's trial balance at 30 September 2015 did not agree and a suspense account was opened. The following errors were discovered. 1 The total of the purchases journal had been undercast by $950. 2 Discount received, $85, had been debited to the discount received account. 3 A payment of rent, $750, had been correctly entered in the cash book, but recorded in the rent account as $570. 4 A purchase of office fixtures, $2300, had been recorded in the general expenses account.

(a)Show the entries in the general journal to correct items 1 to 4. Narratives are not required.[8]
(b)Prepare the suspense account at 30 September 2015 showing the original difference on the trial balance.[4]
(c)Complete the following table to show the effect on the profit for the year of correcting each error. The first item has been completed as an example. Error Increase/Decrease/ No effect Amount $ 1 The total of the purchases journal had been undercast by $950. Decrease 950 2 Discount received, $85, had been debited to the discount received account. 3 A payment of rent, $750, had been correctly entered in the cash book, but recorded in the rent account as $570. 4 A purchase of office fixtures, $2300, had been recorded in the general expenses account.[6]
(d)Explain why an error of commission would not be revealed by the trial balance.[2]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2015). The mark or mark type is shown in brackets.

[1] (a) Purchases Dr 950
[1] (a) Suspense Cr 950
[1] (a) Suspense Dr 170
[1] (a) Discount received Cr 170
[1] (a) Rent Dr 180
[1] (a) Suspense Cr 180
[1] (a) Office fixtures/Fixtures & fittings Dr 2300
[1] (a) General expenses Cr 2300
[1of] (b) Suspense account: 30 Sept Balance/Difference on TB/Trial balance 960
[1] (b) Suspense account: 30 Sept Purchases 950
[1] (b) Suspense account: Discount received 170
[1] (b) Suspense account: Rent 180
[1] (b) Suspense account: Totals 1130
[1] (c) 2 Discount received, $85, had been debited to the discount received account.: Increase
[1] (c) 2 Discount received, $85, had been debited to the discount received account.: 170
[1] (c) 3 A payment of rent, $750, had been correctly entered in the cash book, but recorded in the rent account as $570.: Decrease
[1] (c) 3 A payment of rent, $750, had been correctly entered in the cash book, but recorded in the rent account as $570.: 180
[1] (c) 4 A purchase of office fixtures, $2300, had been recorded in the general expenses account.: Increase
[1] (c) 4 A purchase of office fixtures, $2300, had been recorded in the general expenses account.: 2300
[1] (d) This error occurs when a transaction is entered using the correct amount and on the correct side, but in the wrong account of the same class.
[1] (d) Right amount/right side
[1] (d) Wrong account/same class
[1] (d) Wrong name or person/same class (Max 2)

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