Question 1 (25 Marks) All-In-One Trading started operating on the 01 January 201

Question

Question 1 (25 Marks) All-In-One Trading started operating on the 01 January 2017. Throughout the year the following transaction were recorded in their books as at 31 December 2017. 1. Interest received of N$ 2 500 was credited to Interest expense; 2. Credit sales of N$ 3 000 was not recorded; 3. Bank Charges of N$ 500 was debited to Bank account; 4. Motor Vehicle that was purchased for N$ 12 000 was debited to purchases account and credited to bank account; 5. Loan Received of N$ 1 500 was debited to bank account and credited to creditors account; 6. Payment for wages, N$ 700 was debited to cash and credited wages expense account; 7. Credit sales to Mr. SuperAweh of N$ 2 000, was credited to Mr. SuperAweh account and debited to sales account, since it was a credit sale; 8. Cheque received from a debtor of N$ 1 850 was recorded as N$ 1 580; 9. Cheque payment of N$ 1 000 to Mrs Hosh-Hosh was marked as refer to drawer; 10. Cash drawings of N$ 650 had been credit to the bank account and debited to drawings account; 11. A supplier with a credit balance of N$ 5 250, gave us 10% settlement discount if the account is settled before Independence Day. The account was settled in full before the independence day; 12. Depreciation expense on the motor vehicle of N$ 1 300 was debited to depreciation expense and credited to motor vehicle cost. REQUIRED: Prepare journal entries to correct above mentioned errors.

Explanation / Answer

Recification entries 1 Interest expense 2500 Interest Revenue 2500 (wrong credit to interest expense rectified) 2 Accounts Receivable 3000 Sales revenue 3000 (Recording of credit sales) 3 Miscellaneous expense 500 Bank   500 (Bank charges debited to the appropriate account) 4 Motor Vehicle 12000 Purchases 12000 (Wrong debit to purchases rectified with a debit to asset a/c) 5 Creditors/Accounts payable a/c 1500 Loan From Bank 1500 (Wrong credit recified) 6 Wages expense(700+700) 1400 Cash(700+700) 1400 (Wrong credit & debit rectified by recording twice the same amount--one for rectification & one for actual recording.) (Can pass the same journal entry twice also) 7 SuperAweh A/c.receivable 4000 Sales revenue 4000 (Same as in 6 above) 8 Cash 270 Accounts receivable 270 (1850-1580) (Short-debit rectified) 9 Cash 1000 Accounts payable-Mrs. Hosh 1000 (restoration of the payable on NSF ) Correct Entry 10 Drawings 650 Bank/Cash 650 (Drawings from bank recorded) 11 Accounts payable 250 Cash 225 Purchase discounts 25 (Settlement of supplier account before due date at a 10% dsicount) 12 Motor Vehicles 1300 Accumulated Depreciation-Motor Vehicles 1300 (Wrong credit to the asset a/c rectified)

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