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Draft account of G business shows a profit of 54250 prior to the correction of following errors
a) cash drawing of 250 has not been accounted for
b) debt amounting to 420,which will provided against in full during the year,should have been written off as irrecoverable
c) rental income of 300 has been classified as interest receivables
d) on the last date of accounting period,200 in cash is received from the customer,but no bookkeeping entries have yet been made
what is correct option
1) 53580
2) 53830
3) 54250
4) 55830Do not simply set test questions and expect an answer.
You must have an answer in the same book in which you found the question, and so you should ask about whatever it is in the answer that you are not clear about – then I will do my best to help you 🙂
(I assume that you have watched our free lectures? They are a complete free course for Paper f3 and cover everything needed to be able to pass the exam well.)
sir i solved it but i had answer which is not in options
i ignore point a because drawings has no affect on the profit
for point b, i add 420 to remove expense and then add further 420 as revenue
for point c i deduct 300 because rental income not goes to profit
for last point i add 200 as revenue
but i still not got any of above option
is i am doing right please help me(a) You are correct
(b) Assuming you have copied the question correctly, then you need to reduce the profit (because of the irrecoverable debt expanse). There is no effect on revenue at all.
(c) Rental invoice certainly does go to profit, therefore this error has no effect on the profit.
(d) Receiving cash from a customer does not affect the profit (only making sales affects the profit – not when they pay for the sale).
I do again suggest that you watch the free lectures.
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