Nene Koba, is a sole trader with a small business. The trial balance extracted as at 30 June 2018 did not agree. The credits exceeded the debits by GH¢3,275 and the difference was entered in a suspense account.
A detailed examination of the books was undertaken and the following matters were uncovered:

• Purchases returns of GH¢19,350 has been credited to sales returns as GH¢11,175, and the corresponding entry was correctly entered.
• An addition error was discovered in the sales returns day book and as a result, the posting to the ledger was understated by GH¢1,600.
• An amount of GH¢245 cash received from a customer was debited to the customer’s ac-count and credited to the cash account.
• The cash at hand balance of GH¢5,350 as at 30 June 2018 was omitted from the trial bal-ance in error.
• Building repairs of GH¢4,300 were undertaken during the month ended 30 June 2018, the amount was paid by cheque. The entry was correctly treated in the bank account but GH¢1,800 was credited to building.
• On 1 January 2017, rent for the year ended 31 December 2017 of GH¢ 22,500 was paid and accounted for correctly. Nene Koba’s landlord has indicated that rent for 2018 will increase to GH¢ 30,000 but no invoice has been received. Nene Koba however, has not paid any rent for 2018 and has made no accounting entry for it because he has not received an invoice from the landlord.
• A credit sale of GH¢12,500 (excluding tax) was recorded by debiting sales with GH¢12,500 and crediting receivable with GH¢12,500. The rate of tax is 15%.

Required:
i) Prepare journal entries with appropriate narrations necessary to correct the above errors.                                        (8 marks)

ii) Prepare the Suspense account.                                                                                                                                   (2 marks)

Nyantakyi Ltd (Nyantakyi) was preparing its reconciliation for the month of November 2018 and noted a difference between its bank statement balance and the balance on the bank account in its general ledger. The bank statement shows a balance of GH¢1,596 cash at bank. The balance on the bank account (cash book) in the general ledger was GH¢674(credit).

The following reasons accounted for the difference:

• Five cheques paid to suppliers have not yet been presented at the bank. These are:

• Cheque number 120005 was lost in the post and was cancelled. Nyantakyi have not yet recorded the cancellation of the cheque.
• Cheque number 120010 was incorrectly recorded in Nyantakyi’s cash book as GH¢2,957. The cheque was correctly debited to the bank statement on 5 November 2018 as GH¢2,759.
• Bank Charges of GH¢2,681 was debited by the bank on 29 November 2018.
• A customer’s cheque amounting to GH¢2,240 was returned by the bank in November as the customer had insufficient funds in his account. Nyantakyi is yet to record the returned cheque in their books.
• A deposit of GH¢5,950 entered in Nyantakyi’s cash book on 30 November 2018 was cred-ited on the bank statement on 3 December 2018.
• The bank has incorrectly credited Nyantakyi’s account with an interest of GH¢1,540. This is interest on a deposit account held by the Managing Director personally. The bank had not corrected the error by 30 November 2018.

Required:

i) Prepare Nyantakyi’s adjusted cash book including the necessary correcting entries as at 30th November 2018. (The answer format must clearly indicates whether each entry is a debit or credit)                                                                                (5 marks)

ii) Prepare a reconciliation of the bank statement balance to agree with the cash book balance as at 30th November 2018.      (5 marks)

a) State and explain TWO (2) errors that will not affect the balancing of the trial balance.                                              (4 marks)

b) The trial balance of Pak Ltd has an excess of credit over debit of GH¢12,500. A suspense account has been opened to balance the accounts. The following transactions were later discovered:[/vc_toggle][/vc_column][/vc_row]

i) Interest paid of GH¢5,000 and Interest received of GH¢8,000 have both been entered on the wrong side of the trial balance.

ii) The receivable control account balance of GH¢224,387 had been included in the trial balance as GH¢242,387

iii) Sales of GH¢2,000 had been omitted from the sales records (i.e from the sales day book).

iv) Purchase of raw material of GH¢4,005 was entered in the purchase account as GH¢4,500.

v) The balance on the current account with the Proprietor’s wife had been omitted from the trial balance. This item when corrected will clear the suspense account.

Required:

Open a suspense account and correct the above transaction in it.                                                                                      (6 marks)

When there is a difference in a trial balance, a suspense account is opened with the amount of the difference so that the trial balance agrees (pending the discovery and correction of the errors causing the difference). This is the only time an entry is made in the records without a corresponding entry elsewhere. Not all types of errors affect the balancing of the records and the suspense account.
Required:
Identify and explain THREE errors which does not affect the suspense account.                                                             (6 marks)

WD noted in 2016 that in 2015 it had omitted to record a depreciation expense on an asset amounting to GH¢600. Its accounts before the correction of the error are;

Required:

Describe how the above error should be corrected in accordance with IAS 8: Accounting policies, changes in accounting estimates and errors.                                                                                                                                                         (4 marks)