Carol operates a manual book-keeping system and prepares accounts to 30

September each year. All of her sales are cash sales but she buys goods from
her suppliers on credit terms. She maintains a payables control account and
this account forms part of her double-entry system, so that the balance on
the control account is included in her trial balance. The personal accounts of
individual suppliers are held in the payables ledger as memorandum records
only.
Carol's trial balance at 30 September 2008 showed that credit balances
exceeded debit balances by 1,460. On the same date, the credit balance on
the payables control account was 7,320 but a list of balances extracted from
the payables ledger totalled only 5,494.
Carol placed the trial balance difference into a suspense account and
proceeded to prepare draft accounts for the year to 30 September 2008. The
trial balance difference was treated as an expense in these draft accounts,
which showed a profit for the year of 18,450. Carol then searched through
her accounting records and located the following errors:
1.

A batch of purchase invoices totalling 653 had been omitted from the
accounting records entirely.

2.

Bank charges of 12 had been recorded in the cashbook but nowhere

else.

3.

A purchase return of 275 had been recorded in the purchase daybook

and in the supplier's personal account as if it were a purchase invoice.

4.

Carol's drawings of 500 for the month of September 2008 had been
recorded correctly in the cashbook but then debited to the wages and
salaries account.

5.

A debit balance of 370 on a supplier's personal account had been

shown as a credit balance on the list of balances extracted from the
payables ledger.

6.

The purchase daybook had been overcast by 1,000.

7.

Discounts received totalling 742 had been recorded correctly in

suppliers' personal accounts but then entered as 724 in both the
discounts received account and the payables control account.

Furthermore, the entry in the payables control account had been made
on the wrong side of that account.
8.

The credit side of a supplier's personal account in the payables ledger

had been undercast by 100.

Requirement for question 2

(a)

Write journal entries as necessary to correct the book-keeping errors

which are listed above. (Narratives are not required).

(b)

Show that these journal entries will clear the balance on the suspense
account.

(c)

Write up the payables control account and reconcile the balance on this
account to the total of the list of balances extracted from the payables
ledger.

(d)

Calculate Carol's corrected net profit for the year to 30 September 2008.