Reference no: EM132419448

Question 1: The trial balance of CX Trading as at 31 December 20x5 showed a difference which was posted to a suspense account. Drafted financial statements for the year ended 31 December 20x5 were prepared showing a net profit of $23,120. The following errors were subsequently found:

1. The purchase of a new van for $6,000 was included in the motor van expense account.

2. The debit side of the stationary account is undercast by $250.

3. There is a debit in the rent account of $400 but should be $4,000.

4. The rates on the owner's home of $750 has been paid by the business and debited to the business' rates account.

5. $720 included in the wages account of the business was in fact paid to the house keeper of the owner.

6. Purchases of inventory costing $500 paid by cheque had been totally missed out in the books.

7. Insurance paid by cheque of $150 was credited to both accounts.

Required:

Problem 1: The journal entries to correct the errors of the above. Narratives not required.

Problem 2: A statement of correcting the profit as found in the drafted financial statements. Please provide the authentic solutions along with all the calculation.