Reference no: EM132542264

Question - A trial balance extracted from the books of Pendeleo Ltd. as on 30 June, 2017 did not agree, and the amount of the difference was entered in a suspense account. A trading profit and loss account was prepared on the basis of this trial balance and showed a net profit of Sh.412,500.

The following errors were afterwards discovered and the difference was eliminated.

(i) A sales invoice for Sh.12,925 had been completely omitted from the books.

(ii) A bank overdraft of Sh.5,170 which appeared as a credit balance in the cash book at 30 June 2017 had been omitted from the trial balance.

(iii) A payment of Sh.2,970 to Masekete, a trade creditor, correctly entered in the cash book, had been debited to the personal account as Sh.2,790.

(iv) The debit side of the wages account had been under-cast by Sh.1,650.

(v) A provision of Sh.880 for sundry expenses outstanding at 30 June 2017, debited to sundry expenses account at that date not been brought forward to the credit of the account in the following period and no credit entry had been made in any other account.

(vi) Discounts received from suppliers amounting to Sh.9,680 had been entered on the wrong side of the purchases ledger control account and the closing balance in the same account was included in the trial balance.

(vii) On 30 June 2017, goods valued at Sh.660 (selling price) were returned by a customer. No entry had been made in the books and these goods had not been included in the closing stock. The cost of these goods was Sh.495.

Required -

a) Journal entries to correct the above errors.

b) Suspense account duly balanced.

c) Calculation of the correct net profit.