Reference no: EM132778941

An error is an irregularity in the accounting records that renders the financial statements not valid. The trial balance of Pepe Enterprise as at 31st March, 2012 had an unidentified error hence the Trial Balance was not balanced. The Trial Balance was balanced by inclusion of a debit balance difference of KES 5,000 passed to a suspense account.

Further investigations revealed the following errors:

(1) The total sales day book for March 2012 had been overstated by KES 4,500.

(2) Discount received of KES 2,500 in January 2012 had been posted to the debit of the discount allowed account.

(3) Payment by cheque to a creditor for KES 3,150 had been entered in the cash book as KES 1,350.

(4) Wages of KES 4,200 paid in the month of March had not been posted from the cash book.

(5) In March 2012, purchases of new equipment amounting to KES 10,000 had been debited to the purchases account. 2

(6) A remittance of KES 2,700 received from a credit customer in March 2012, had been credited to the sales account.

(7) The proprietor of Yepe Enterprise withdrew a cheque of KES 1,400 for his personal use. The bank account and the drawings account were both credited.

Required:

Problem 1: Pass journal entries to correct each of the errors discovered and ensure the suspense account balance is cleared to zero.