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The accountant for Fine Lines & More was hospitalised yesterday. The Senior Operations

Manager $($SOM$)$ called you to assist him with the accounts. He advised you that the trial balance

for April $2024$ had a difference of $$20,000$ on the DR column, which was posted to the Suspense

Account. The Net Profit at that point was $$48,200.$

The SOM said he had ordered an investigation of the errors and he provided you with the

following errors his team had identified so far:

a$.$ Prepaid insurance $$5,700$ was included in Other Expenses.

b$.$ Payment of $$3,300$ made to D$.$ O$.$ Nut was posted in error to Don Nutthal account.

c$.$ Cash drawings of $$1,200$ was posted as $$2,100$ to the correct accounts in the general

ledger.

d$.$ Credit sales to P$.$ Wiggan for $$8,500$ was credited in Accounts Receivable and debited to

Sales in error.

e$.$ Incorrect postings to the general ledger were $($i$)$ Carriage Inwards overstated by $$1000,$

$($ii$)$ Rent Received was also overstated by $$700$ and $($iii$)$ Bad Debt was understated by

$$300$

f$.$ Payment of $$8,000$ to a creditor was credited twice in the bank account but was not posted

to Accounts Payable

g$.$ Motor vehicle expenses of $$2,650$ paid by cheque was only posted to the Bank account in

the general ledger

h$.$ Discount Received was incorrectly transferred to the trial balance. It should be $$880$ but

$$80$ was transferred instead.

i$.$ Opening Inventory was overstated by $$1,500$

j$.$ Return Outwards of $$2,150$ was posted as a credit to the Return Inwards account and

debited to Accounts Payable.

REQUIRED:

a$.$ Prepare the journal entries to correct these errors with narratives describing the type

of error being corrected $[35$ marks$]$

b$.$ Write up the Suspense Account to show the error corrections and balance it off.

$[10$ marks$]$

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