Accounting Lesson 59 Correction of Errors 10262020 Paul

Accounting Lesson 59 Correction of Errors 10/26/2020 Paul Copeland 1

By the end of this Lesson 1. Mark the homework. . Sheet 33 Q’s 2 & 3 You will 2. Learn how to correct errors (6 types) that do not prevent the trial balance from agreeing 10/26/2020 Paul Copeland 2

First. . mark your work and hand in Homework answers given over the next 4 slides Give a tick for each correct entry…add ticks to give total for each question Careful marking leads to perfect answers and outstanding exam results …. go for it! 10/26/2020 Paul Copeland 3

Correction of Errors…Top Tip Even if you are asked to do the correcting double entry in the General Journal. . always work your answer out in ledger form first! 1 2 3 3 Stage Method Show the entries that have been done Identify the mistake Correct the mistake with a double entry Together we will work through the 10/26/2020 Paul Copeland H Sagrott question 4

Business of K Sagrott…(a) Bank D Mc. Duff 28 D Mc. Nab Bank 28 D Mc. Nab D Mc. Duff 28 Working …you can abbreviate D Mc. Duff 28 General Journal D Mc. Duff Dr 28 D Mc. Nab 28 Being correction of error of commission 10/26/2020 Paul Copeland Answer 5

Business of K Sagrott…(b) Bank Office furniture 65 Office Expenses Bank 65 Off furniture 65 Office furniture Office Expenses 65 General Journal Office furniture Dr 65 Office expenses 65 Being correction of error of principle 10/26/2020 Paul Copeland 6

Business of H Sagrott…(c) Discount Received Sundries 10 Discount Allowed Disc Rec 10 General Journal Discount allow Dr Discount received 10 10 Being correction of error of commission 10/26/2020 Paul Copeland 7

Stop off at your Reference Point You will need to know the 6 types of error not affecting the trial balance 1. Error of commission Failure to do one’s job properly because accounts with similar names were mixed up 2. Error of principle Lack of understanding of how to do accounts properly 3. Original error Mistake made in a book of original entry 4. Reversal Entire double entry the wrong way round 5. Compensating Two unrelated mistakes that by chance cancel each other 6. Omission Complete double entry totally missed out 10/26/2020 Paul Copeland 8

Question 3 A Smythe M Ltd Pch 1 600 Purch M Ltd 1 600 General Journal Save time by abbreviating on working accounts 1600 Purchases 1600 Being correction of error of principle Bank D Gor ? Jn 30 Disc Rec D Gorrie D Gor ? Being correction of discount disallowed Bank ? DR 7 -50 Jn 30 Fittings D Rec 7 -50 Dep on M 7 -50 80 80 Being correction of error of commission Machinery Fit 80 80 10/26/2020 7 -50 Machinery Dis Rec D Gor 7 -50 Ma Jn 30 Machinery Ltd M Fittings 80 Dep 80 Paul Copeland 9

Now. . do Q 4 in your book Even if you are asked to do the correcting double entry in the General Journal. . always work your answer out in ledger form first! 1 2 3 3 Stage Method Show the entries that have been done Identify the mistake Correct the mistake with a double entry You should be able to do Q 4 inside 10 10/26/2020 Paul Copeland minutes. . without cutting corners! 10

Big Picture on Correction of Errors that do prevent the trial balance totals from agreeing Remember the 2 parts Errors that have NO EFFECT on the agreement of the trial balance So We will now move on to Done this one 10/26/2020 Paul Copeland 11

If the Trial Balance does not agree Trial Balance of D Beckham at 30 April 2001 Suspense Account Purchases 50 Bal b/d Dr 50 Crediting Purchases Account with £ 50 will correct purchases and debiting suspense with £ 50 will clear the suspense Capital Sales Purchases Rent Premises Suspense Cr 20 30 80 6 14 50 100 Make the trial balance agree by creating a suspense account So if PDB was too big by £ 50 this bigger figure would have been posted 10/26/2020 Account to Purchases In the first few days of May the error was found Paul Copeland (Purchases Day Book was overcast by 12£ 50)

Sheet 34 Question 1 Suspense account Balance b/d 39 M Lacey . . A Baynes General Journal 39 M Lacey Dr M Lacey account Suspense 10/26/2020 Suspense 39 39 39 Being correction of failure to post to creditors account Paul Copeland 13

Homework For next Lesson From worksheet 33 do questions 5 and 6 From worksheet 34 do questions 2 and 3 please, always stick the question into your book 10/26/2020 Paul Copeland 14

Summary EXPLAIN TO YOUR PARTNER 1. Name and explain the 6 types of error that do not prevent the TB from agreeing 2. What is the purpose of a suspense account 3. Why are accountants only happy when the suspense account has been cleared? Please complete the lesson evaluation form. . your constructive feedback is greatly valued 10/26/2020 Paul Copeland 15