Question

2. EXERCICE: We have received the trial balance from our retail company ROPA SUCIA for the year-end. Correct the Trial Balance mistakes using T- accounts or balance sheet equation ACCOUNT Cash Account receivables Debtors Fix assets Furniture Fix assets Computers GROUP Assets Assets Assets Assets Assets Inventory Liaiblities Accounts Payable Creditors Liabilities Short term Loan Equity Capital Equity OPENING DEBIT CREDIT ENDING BALANCE 40.000,00 50.000,00 60.000,00 10.000,00 260.000,00 40.000,00 20.000,00 10.000,00 50.000,00 50.000,00 60.000,00 10.000,00 260.000,00 40.000,00 20.000,00 50.000,00 121.500,00 280.000,00 20.000,00 10.000,00 30.000,00 5.000,00 16.500,00 20.000,00 50.000,00 60.000,00 100.000,00 61.500,00 280.000,00 20.000,00 Retained Earnings Sales COGS Other Revenue Salaries Energy Rent Marketing Expenses TOTAL 10.000,00 P&L P&L P&L P&L 30.000,00 5.000,00 16.500,00 20.000,00 511.500,00 511.500,00 2.1.First check if there are mistakes in the trial balance 2.2.The accountant informed vou that there is an invoice for 10.000 from our customer Apple that has not been booked 2.3.Also you find out that another invoice for 5.000 from Apple 2.4.You found out that an asset tool worth 5.000 with 3 years 2.5.3,500 were received from Apple but this amount was credited 2.6.We have not received December invoice for "Endesa" energy was booked under Accounts pavable useful life, was booked as maintenance costs in the amount of Google supplier. You should book a provision. Please explain your assumptions

I prefer balance sheet equation to be used

Answer 1

Answers are as follows:

2.1 Mistakes in Trial Balance

i. No depreciation was considered on fixed assets

ii. Accounts payable creditors of 4000000 are shown in Debit side, should be shown in credit side as it is liability

iii. Short term loan 2000000 is shown in debit, should come in credit side.

iv. COGS 2000000 should come in debit side

v. Other revenue should be in credit side

vi. Salaries should be in debit side

vii. Marketing expense should be in debit side

Viii. Capital ending balance is wrong

2.2 Increase sales and accounts receivable by 10000

2.3 Reverse the invoice booked of 5000 under accounts payable by decreasing accounts payable and COGS and increase sales and accounts payable by 5000

2.4 Assets tool booked as maintenance cost will be remain same, as considering the value of the asset tool it can be fully charged to P&L

2.5 received from apple 5000 booked to google will not impact the TB, however it will impact individual ledger account

2.6 Dec invoice of "Indesa" energy supplier not received for December. Provision should be book for one month cost based on average expense per month for energy. In the given case if we consider that 500000 is for 11 month, than the basis of the same the average one month energy expense will be 45455. Provision of 45455 should be done for December month. 45455 will be added to energy cost and accounts payable.

Considering the point 2.1 to 2.6 the correct trial balance is as follows:

Group	Account	Opening	Debit	Credit	Ending Balance
Assets	Cash	1000000	4000000		5000000
Assets	Accounts receivables Debtors		5015000		5015000
Assets	Fixed assets furniture		6000000		6000000
Assets	Fixed assets Computer		1000000		1000000
Assets	Inventory		26000000		26000000
Liability	Accounts receivables Creditors			4040455	-4040455
Liability	Short term loan			2000000	-2000000
Equity	Capital	5000000		10000000	-5000000
Equity	Retained earnings	-6000000		6150000	-12150000
P&L	Sales			28015000	-28015000
P&L	COGS		1995000		1995000
P&L	Other Revenue			1000000	-1000000
P&L	Salaries		3000000		3000000
P&L	Energy		545455		545455
P&L	Rent		1650000		1650000
P&L	Marketing Expense		2000000		2000000
			51205455	51205455	0