John Given’s trial balance at 31 May 2013 failed to agree and a suspense account for the difference, $926 debit, was opened. The following errors were discovered: 1 Commission received, $120, had been recorded in the account twice. 2 Total trade receivables were understated by $824. 3 A payment for insurance, $650, had been correctly entered in the cash book, but recorded in the insurance account as $560. 4 The total of the sales returns journal had been overcast by $108. REQUIRED

Mark scheme

Marking points from the official mark scheme (May/June 2013). The mark or mark type is shown in brackets.

1. [1] **1** Commission received Dr $120
2. [1] **1** Suspense Cr $120
3. [1] **2** No debit required
4. [1] **2** Suspense Cr $824
5. [1] **3** Insurance Dr $90
6. [1] **3** Suspense Cr $90
7. [1] **4** Suspense Dr $108
8. [1] **4** Sales returns/returns inwards Cr $108
9. [1] 2013 May 31 Balance on TB Dr $926
10. [1] 2013 May 31 Commission received Cr $120
11. [1] Trade receivables Cr $824
12. [1] Sales returns Dr $108
13. [1] Insurance Cr $90
14. [1] Total $1034 on both sides
15. [2] (Omission) Transaction is omitted completely from books.
16. [2] (Commission) Correct amount posted to correct side of the ledger in the same class of account, but to the wrong account.
17. [2] (Principle) Correct amount on the correct side in the wrong class of account.
18. [2] (Complete reversal) A transaction that should be debited is credited or vice versa.
19. [2] (Original entry) The original figure entered is incorrectly entered in the books of prime entry.
20. [2] (Compensating: error) One error(s) cancels out another error(s) of the same amount.
21. [max 6]