The accountant for Lobelia’s Flowerhouse determined the profit for the accounting period

| March 30, 2017

iCMA 43
1. The accountant for Lobelia’s Flowerhouse determined the profit for the accounting period ended in 2011 to be £235,000. However, subsequently, the following errors were discovered.

A delivery van for the purpose of delivering flowers costing £40,000 had been included in the purchases account.
A return outwards of £1,550 had been wrongly entered as a sales return instead of a purchase return.

Calculate the correct net profit for the period

iCMA 43
2. When a trial balance did not balance, an accountant opened a suspense account. The accountant then discovered the following errors.

Telephone expense of £1,900 had wrongly been entered in the accounts as £9,100.

A purchase of 2,000 had been recorded twice in the purchases account.

A £1,400 settlement discount received from a supplier had been posted to the wrong side of the discounts received account.

Note that the other side of the entries was correct, otherwise there would not have been an imbalance.

How much was the original balance on the suspense account? Identify the suspense account figure as either a credit or a debit balance.

Drag and drop the correct answers in the boxes provided.

/ / /

£12,000 £11,000 £13,500

Debit Credit

iCMA 43
3. Ben sells flowers. He decides to give his girlfriend 100 roses to wish her a Happy New Year and he takes these out of the inventory he purchased early in the morning of 31 December. What adjustment should Ben make in respect of the 100 roses, assuming that the roses cost £0.50 each and that he uses a periodic inventory system?

The periodic inventory system debits inventory purchased to the purchases account and requires an adjustment for closing inventory at the end of an accounting period

Select one: DR Drawings £50 / CR Suspense £50 DR Purchases £50 / CR Drawings £50 DR Inventory £50 / CR Drawings £50 DR Drawings £50 / CR Purchases £50

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