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ASSIGNMENT 1

 

(a)    Explain the purposes for which control accounts are prepared.   

(b)   The balances and transactions affecting the control accounts of delta Ltd. for the month of November 1997 are listed below:-

 

	Sh.
Balances on 1 November 1997:
Sales ledger	9,123,000	(debit)
	211,000	(credit)
Purchases ledger	4,490,000	(credit)
	88,000	(debit)
Transactions during November 1997:
Purchases on credit	18,135,000
Allowances from suppliers	629,000
Receipts from customers by cheques	27,370,000
Sale on credit	36,755,000
Discount received	1,105,000
Payments to creditors by cheques	15,413,000
Contra settlements	3,046,000
Bills of exchange receivable	6,506,000
Allowances to customers	1,720,000
Customers cheques dishonored	489,000
Cash received from credit customers	4,201,000
Refunds to customers for overpayments	53,000
Discounts allowed	732,000
Balances on 30 November 1997
Sales ledger	136,000	(credit)
Purchases ledger	67,000	(debit)

 

Required:

 

The sales ledger and purchases ledger control accounts for the month of November 1997 and show the respective debit and credit closing balances on 30 November 1997

 

ASSIGNMENT 2

On 31 December 2001, an inexperienced bookkeeper working for john, a sole trader extracted a trial balance.  Due to errors committed by the bookkeeper, the trial balance failed to balance by Sh 369,400.  He placed the difference in a suspense account as shown below:

John trial balance as at 31 December 2001

	Sh	Sh
Fixed assets – cost	832,000
Stocks:
1 January 2001	148,000
31 December 2001		98,800
Trade debtors		76,000
Prepayments		10,000
Trade creditors	34,600
Bank overdraft		15,200
Accruals		16,000
Drawings	359,600
Capital		1,054,000
Sales	1,043,200
Provision for depreciation		166,400
Purchases		733,000
Operating expenses	126,000
Provision for doubtful debts		3,800
Discounts received	5,000
Discounts allowed		5,800
Suspense account	________	369,400
	2,548,400	2,548,400

 

Investigations carried out after preparing the above trial balance detected the following errors:

 

1.         The total of the sales daybook for December 2001 was overcast by Sh 25,700.

2.         On July 2001, the business purchased office equipment for Sh 40,000.  These were debited to purchases account.  Depreciation on the equipment is at the rate of 10% per annum on cost and based on the period (months) of usage in the year.

3.         A payment to a creditor by cheque of Sh. 8,500 was erroneously credited to the creditor's account.

4.         A payment of Sh. 4,500 for telephone expenses was debited to telephone account as Sh 5,400.

5.         An amount of Sh 15,000 received from a debtor was not posted to the debtor's account from the cashbook.

6.         Purchases daybook for October 2001 was under cast by Sh 28,000.

 

Assume the business had reported a net profit of Sh 85,800 before adjusting for the above errors.

Required:

(a)      The adjusted trial balance and the correct balance of the suspense account.

(b)     Journal entries to correct the errors (Narrations not required)                                  

(c)      Suspense account starting with the balance determined in the adjusted trial balance in (a) above.                                                                                                         

(d)     The adjusted net profit for the year.