You have been provided with their trial balance and a list of errors.
Coffee 4 Life Trial Balance
Debit
Credit
Equity Shares
£500,000
8% debentures
£175,000
Share premium
£50,000
Retained profits
£130,000
Motor vehicles (cost)
£250,000
Accumulated depreciation
£35,000
Inventory
£80,000
Accounts receivable
£125,000
Accounts payable
£60,000
Bank
£166,000
Sales
£400,000
Purchases
£250,000
Wages
£160,000
Electricity
£40,000
Rent
£160,000
General expenses
£125,000
Interest expense
£14,000
Total
£1,356,000
£1,364,000
List of errors identified
In January the company purchased a small deliver van costing £15,000. This has been included in general expenses. Note: ignore any adjustment that might be needed to depreciation.
The company made a sale near the end of the financial year to a local restaurant for £60,000. This sale was on credit and has not yet been recorded.
Rental on a factory is £12,000 per month. The debits and credits have been done correctly but for the wrong amount. This is the only rent the company pays.
When the journal entries were being posted to the individual accounts the fire alarm went off. As a result, one of the entries for wages was not completed - the wage account was debited for £20,000 but no entry was made in the bank account.
The trial balance was prepared during an extremely busy period. Consequently, one of the accounts was entered on the wrong side of the trial balance.
Q1) Prepare journal entries to correct the errors, clearly identifying what type of error you are correcting.
Q2) Demonstrate that the suspense account is now cleared.
Q3) Demonstrate that the trial balance balances.