Reference no: EM132910181

Question 1a - 1. Credit sales of RM500 had been omitted from the books. The trial balance of Optimax Enterprise as at 31 Jan 2021 failed to agree. Upon investigation, the following errors were detected:

2. Depreciation expenses of RM700 had been credited to depreciation account.

3. Rental of RM410 directly debited by the bank has been completely omitted from the record.

4. Discount allowed of RM160 was debited to discount received account.

5. A new set of furniture purchased for RM1,820 for office use was wrongly recorded as purchase of machinery.

6. Purchase Journal was overcast by RM175.

The gross profit before correction of errors was RM35,750.

Required - Prepare the journal entries to correct the above errors (Narratives are not required) and Calculate the revised gross profit after the correction of errors.

Question 1b - Baxter, a retailer of children's clothing has prepared his draft financial statements for the year ended 30 April from his business records. The draft net profit for the year was RM35,696. The Trial Balance showed a Suspense account of RM3,593 on the debit side.

A review of his business records indicated the following errors:

1. Purchases of RM450 from J. Anson have been credited to the Purchases account.

2. Sales of RM350 to Uncle Soo had been debited to Auntie Soo's account.

3. Rent of RM2,200 directly debited by the bank has been completely omitted from the accounts.

4. Discount allowed of RM101 was debited to Discount Received account.

5. A cheque for cash sales of RM750 was recorded only in the Cash Book.

6. Salaries paid of RM1,585 had been entered in the credit side of salaries account as RM1,858.

7. The records had omitted a disposal of motor vehicle for RM10,000 by cheque. The original cost was RM80,000 and accumulated depreciation was RM60,000.

8. The Accountant discovered that depreciation of office equipment that was newly acquired during the year had been wrongly calculated based on full year depreciation. The company's depreciation policy is according to the number of months' ownership. The office equipment was acquired on 1st Jan at RM7,200 and depreciated on straight line basis over 6 years at RM1,200 per year.

Required - In each case, prepare the journal entries to correct the errors (narratives are not required), Write up the Suspense account to clear the difference and Compute the adjusted net profit.