C hapter 25: Errors not affecting trial

balance agreement
Contents of chapter
This chapter explains what kinds of errors do not throw the trial balance totals out of agreement. Then it shows
the methods for correcting them.

Notes for teachers

The following errors do not affect trial balance agreement:
1
(i) Errors of commission.
(ii) Errors of principle.
(iii) Errors of original entry.
(iv) Errors of omission.
(v) Compensating errors.
(vi) Complete reversal of entries.

Errors made in year-end adjustments may not affect the trial balance agreement.
2

In each case, there will be a (diary) entry in the journal before the ledger accounts are corrected.
3

Students (when they read Chapter 26) should remember that the correction of none of the above errors
4
would pass through a suspense account.

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Answers to MCQs and exercises
25.1 C 25.2 B 25.3 A 25.4 B 25.5 C

25.6
1. Error of commission
2. Error of omission
3. Error of principle
4. Error of original entry

The Journal
Dr Cr
$ $
1. H Luen 678
H Lui 678
2. Machinery 4,390
L Po 4,390
3. Van 3,800
Motor expenses 3,800
4. C Fat ($221 – $212) 9
Sales 9

25.7X
1. Error of commission
2. Error of principle
3. Error of original entry
4. Complete reversal of entries

The Journal
Dr Cr
$ $
1. H Woo 699
K Wong 699
2. Cash 189
Bank 189
3. K Li 10
Purchases 10
4. H Kwong 178 *
Cash 178*

* (4) needs to double the amount first to cancel out the error and then replace it with the correct amount.

151
 25.8X
(a) F Mok
Trial Balance as at 31 December 20X6
Dr Cr
$ $
Stock as at 1 January 20X6 3,000
Purchases 10,000
Sales 22,000
Office equipment (net) 10,000
Furniture and fittings (net) 20,000
Bank 6,000
Debtors 3,600
Creditors 2,400
Office expenses 4,000
Sundry expenses 2,500
Capital 34,700
59,100 59,100

(b) The Journal

Dr Cr
$ $
1. Office expenses (repairs) 500
Office equipment 500
Repairs of office equipment wrongly entered in office equipment account. Error now corrected.
2. Sales 200
Purchases 200
Purchases and sales have been overcast by $200. Errow now corrected.
3. Sundry expenses 100
Accrual 100
$100 of sundry expenses should have been accrued, now corrected.

25.9
(a) T Sang
Corrected Trial Balance as at 31 March 20X8
Dr Cr
$ $
Stock as at 1 April 20X7 21,400
Discounts allowed 620
Discounts received 900
Provision for bad debts 1,920
Purchases 188,000
Returns outwards 2,800
Sales 264,200
Returns inwards 2,200
Buildings at cost 140,000
Provision for depreciation: Buildings 7,000
Motor vehicles at cost 30,000
Provision for depreciation: Motor vehicles 9,000
Capital 169,200
Bank 14,200
Debtors 22,600
Creditors 15,200
General expenses 33,200
Drawings 18,000
470,220 470,220

152
(b) (Dates and narratives omitted)
The Journal
Dr Cr
$ $
1. Creditor: F H Ltd 148
Returns outwards 148
2. Drawings 333
Purchases 333
3. T Woo 168
T Ho 168
4. Discounts allowed 30
K Young 30

25.10
(a) The Journal
Dr Cr
$ $
1. Furniture and fittings 140
Trading (Purchases) 140
Purchases of fittings wrongly entered in purchases account, now corrected.
2. Profit and loss 280
Provision for depreciation: Motor vehicles 280
Depreciation of $280 should be provided for the motor vehicles.
3. Profit and loss (Bad debts) 41
Trade debtors 41
A debt of $41 should be written off as bad.
4. Trading 124
Stock 124
Closing stock has been overvalued by $124. Error now corrected.

(b) R Tse
Balance Sheet as at 31 December 20X6
Fixed Assets $ $ Capital $
Furniture and fittings ($1,540 + $140) 1,680 Balance as at 1 January 20X6 7,690
Motor vehicles 2,980 Add Net profit 2,735
Less Accumulated depreciation 280 2,700 10,425
4,380 Less Drawings 2,860
Current Assets 7,565
Stock ($2,724 – $124) 2,600 Current Liabilities
Trade debtors ($1,241 – $41) 1,200 Trade creditors 1,850
Bank 1,235 5,035
9,415 9,415

153
 25.11X
(a) The Journal
Dr Cr
$ $
1. Stock [($12 – $1.2) × 200] 2,160
Trading 2,160
2. Expenses (Profit and loss) 820
Prepayment 410
Accrual 410
3. Provision for depreciation [$12,000 – ($120,000 – $34,800 + $12,000) × 10%] 2,280
Profit and loss 2,280
4. Profit and loss 580
Provision for doubtful debts ($8,400 × 5%) 420
Provision for discounts allowed [($8,400 – $420) × 2%] 160
5. Insurance Company 5,500
Profit and loss 5,500

(b) The corrected balance sheet as at 31 March 20X6 should appear as follows:

$ $ $ $ $
Fixed Assets Capital
Cost 120,000 Balance as at 1 April 20X5 80,000
Less Accumulated depreciation 32,520 87,480 Add Net profit 39,990
119,990
Current Assets Less Drawings 12,000
Stock 11,780 107,990
Trade debtors 8,400 Current Liabilities
Less Provision for doubtful Trade creditors 6,480
debts 420 Accrual 1,830 8,310
Provision for discounts
allowed 160 7,820
Non-trade debtors 5,500
Bank 3,720 28,820
116,300 116,300

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