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Dear Sir, kindly advice
1) A purchase return of $48 has been wrongly posted to the debit of the sales returns account, but has been correctly entered in the supplier’s account. Which of the following statements about the trial balance would be correct. The answer is the debit side to be $96 more than credit side.
Did The two $48 come from Wrongly debit to ales return and correctly Debit to Payable-Supplier x?
2) Beta Co has total assets of $650,000 and profit of $150,000 recorded in financial statement for the financial year ended 31 Dec 2013, the inventory costing of $50,000 with a resale value of $75,000, was received into the warehouse on 2nd Jan 2014 and included in inventory value that was recorded in the financial statement as at 31 Dec 2013. Asking of adjusted figure of Total Asset and Profit.
The adjusted Total asset is $650,000-$50,000=$600,000. Since the received date was
after the closing date It is understood.But why adjusted profit was $150,000-$50,000=$100,000?
1. What they should have done is credit the purchases return account.
What they have done is debit the sales return account.So the debits are too big by 48, and the credits are too small by 48.
So in total the debits will be 96 more than the credits.2. The inventory was included in the statements (so will have been subtracted in arrived at the cost of sales in the Statement of profit or loss) and it should not have been.
So the correct figure for inventory in the SOPL is lower by 50,000. So the cost of sales is higher by 50,000 and therefore the profit is lower by 50,000.
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