Reference no: EM133003854

Christine Mboma is a sole proprietor with a small business operating in Windhoek. The trial balance extracted as of 30 April 2021 failed to agree. A deficiency of N$24 720 exists on the credit side.

A detailed examination of the books was undertaken, and the following matters were uncovered:

1. An old motor vehicle was sold on the 1st of April 2021 for N$22 200. The vehicle originally cost N$100 500 and had a balance in the accumulated depreciation account of N$84 600 at the time of the sale. The only entry that has been made to record the transaction is to debit bank and credit sales with N$22 200.

2. Discount allowed of N$390 were credit to the discount received account. The entry in the receivable's personal account was correct.

3. A credit note for N$4 620 for purchases returns was treated correctly in the supplier's account and debited to the purchases returns account as N$5 280.

4. A cheque payment to a trade payable for N$7 800 was treated appropriately in the supplier's account and debited to drawings. Note: Ignore the effects of VAT and depreciation.

REQUIRED:

Problem a) Prepare the general journal entries, necessary to correct the above errors.

Problem b) Prepare a suspense account to clear the difference.

Problem c) Prepare a statement showing the effect on the proprietor's profit (if any) of correcting each of the above errors. You should commence your answer with the pre-accounting profit of N$31 000.