2020 PHS 3E POA EOY P2 Q3
3 Accountants must put in place checks in the accounting system. One of the tools used is trial balance.
Additional information
1. The owner took out an office computer costing $2 100 for his son. This has not been recorded yet.
2. The net realisable value of the inventory was $47 930.
3. Interest expense of $200 was unpaid.
REQUIRED
a. What is a trial balance?
[1]
b. Explain two purposes of preparing a trial balance.
[2]
Wee’s accountant prepared the following trial balance on 20 May 2020 before he went on leave.
Trial Balance as at 20 May 2020
DR $ | CR $ | |
Motor vehicles | 64 000 | |
Office equipment | 33 000 | |
18 330 | ||
124 500 | ||
1 840 | ||
70 200 | ||
Rent and rates | 14 300 | |
Insurance | 2 500 | |
Salaries and wages | 25 600 | |
Commission income | 3 500 | |
Trade payables | 14 500 | |
Trade receivables | 20 750 | |
Cash at bank | 600 | |
Cash in hand | 180 | |
Loan from bank | 40 000 | |
72 900 | ||
5 300 | ||
256 000 | 256 000 |
The following summarised the events which took place between 21 and 31 May 2020 (inclusive):
1. Goods costing $5 300 were sold on credit for $9 300.
3. Trade debtors who owed $12 750 settled their debts by cheques. Total discounts of $150 were given for prompt payment.
4. Owner withdrew $50 cash for own use.
5. The following expenses were paid for by cheque:
(i) | salaries and wages | $4 200 |
(ii) | insurance | $200 |
(iii) | repairs to office equipment | $180 |
REQUIRED
c. Update the trial balance to 31 May 2020.
[10]
[TOTAL 13]
Trial balance is a listing of ledger balances on a particular date.
b) Purposes of trial balance:
1. To check on the arithmetic accuracy and completeness of double
entries made in the ledger.
2. To facilitate the preparation of financial statements.