Correction of trial balance

WELCOME BACK. As we continue to complete the syllabus, our presentation this week will be a continuation of last week’s presentation. The focus at this time for you is to grasp as many principles as possible, retain them, and use them whenever you have to solve an accounting problem. Below are two worked examples. The section captioned ‘Reasoning’ will give a full explanation of what is to be done and why. The section captioned ‘Workings’ simplifies the key. Pay keen attention.

WORKED EXAMPLE QUESTION 1

A trial balance was drawn up by a radio and television dealer Ishmael on April 30, 2018, but the totals did not agree. The books were checked, and the following errors and omissions were identified: i. The purchases book was overcast by $800. ii. A payment of $1,680 for motor van repairs was entered correctly in the cash book but posted as $960 in the van repair account.

iii. Discounts received of $520 were correctly debited to the creditors account, but no other entries have been made.

iv. The purchase of testing equipment for $5,600 has been debited to the purchases account. [>1]

v. Goods returned to Ishmael costing $480 have been correctly posted to the purchases returns account. Ishmael’s account in the purchases ledger has been wrongly credited. [>2]

vi. Ishmael has taken a television set, costing $140, from stock for personal use, and it has been posted to the credit side of the drawings account and the debit side of the purchases account. [>3]

You are required to, from (i) to (vi), name the type of error and show the necessary corrections.

This is all we have time for now, but always bear in mind that you must get up each morning with renewed determination if you want to go to bed with full satisfaction. Never let what you cannot do stand in the way of what you can.