Journal entries to correct the errors given above. The Suspense Account clearly showing the opening balance on this account. Prepare a Statement of Corrected Net Profit for Trophy Enterprises for the year ended September 30, 2013. Prepare a Corrected Trial Balance for the business.

The total of the Purchases Day Book was undercast by $135. This means the Purchases account is understated. To correct this, Purchases must be debited, and the Suspense Account credited.

$$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Purchases} & & 135 & \\ \quad \text{To Suspense Account} & & & 135 \\ \text{(To correct undercast of Purchases Day Book)} & & & \\ \end{array} }$$

A payment of $400 for Carriage Outwards was correctly recorded in the Cash Book but was not posted to the Carriage Outwards Account. This means the Carriage Outwards account is understated. To correct this, Carriage Outwards must be debited, and the Suspense Account credited.

$$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Carriage Outwards} & & 400 & \\ \quad \text{To Suspense Account} & & & 400 \\ \text{(To record unposted Carriage Outwards)} & & & \\ \end{array} }$$

Discounts Received of $87 were debited to the Discounts Allowed Account. Discounts Received should be credited, and Discounts Allowed should not have been debited. To correct, credit Discounts Received by$87 and credit Discounts Allowed by $87 to reverse the incorrect debit. The balancing debit goes to the Suspense Account.

$$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Suspense Account} & & 174 & \\ \quad \text{To Discounts Received} & & & 87 \\ \quad \text{To Discounts Allowed} & & & 87 \\ \text{(To correct misposting of Discounts Received)} & & & \\ \end{array} }$$

Interest Received of $168 was omitted from the Trial Balance. Interest Received is revenue and should be credited. The balancing debit goes to the Suspense Account.

$$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Suspense Account} & & 168 & \\ \quad \text{To Interest Received} & & & 168 \\ \text{(To record omitted Interest Received)} & & & \\ \end{array} }$$

Sales Returns from a debtor totaling $390 were correctly recorded in the Sales Returns Account but were incorrectly debited to the debtor's account. Sales Returns reduce the amount owed by a debtor, so the debtor's account should have been credited. To correct the incorrect debit, credit the debtor's account by$390. To record the correct reduction, credit the debtor's account by another $390. The balancing debit goes to the Suspense Account.

$$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Suspense Account} & & 780 & \\ \quad \text{To Accounts Receivable (Debtor)} & & & 780 \\ \text{(To correct incorrect debit to Debtor's account for Sales Returns)} & & & \\ \end{array} }$$

A cash sale for $204 was debited to the Sales Account and credited to the Cash Account. For a cash sale, Cash should be debited and Sales credited. To correct, debit Cash by$204 (to reverse the incorrect credit) and another $204 (for the correct debit), totaling$408. Credit Sales by $204 (to reverse the incorrect debit) and another$204 (for the correct credit), totaling $408.

$$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Cash} & & 408 & \\ \quad \text{To Sales} & & & 408 \\ \text{(To correct misposting of cash sale)} & & & \\ \end{array} }$$

The purchase of Equipment for $5,400 was debited to a Debtor's account.

• First, correct the misposting: Debit Equipment by $5,400 and credit Accounts Receivable (Debtor) by$5,400 to reverse the incorrect debit.
• Second, record depreciation: Calculate depreciation as $5,400 \times 10\% =$540. Debit Depreciation Expense and credit Accumulated Depreciation.

$$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Equipment} & & 5\,400 & \\ \quad \text{To Accounts Receivable (Debtor)} & & & 5\,400 \\ \text{(To correct misposting of Equipment purchase)} & & & \\ \end{array} }$$ $$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Depreciation Expense} & & 540 & \\ \quad \text{To Accumulated Depreciation - Equipment} & & & 540 \\ \text{(To record depreciation on new equipment)} & & & \\ \end{array} }$$

Drawings of $4,862 made by the owner was only recorded in the bank account. This means the Drawings account was not debited. To correct this, debit Drawings and credit the Suspense Account.

$$\boxed{ \begin{array}{l l r r} \text{Particulars} & & \text{Debit (\$)} & \text{Credit (\$)} \\ \hline \text{Drawings} & & 4\,862 & \\ \quad \text{To Suspense Account} & & & 4\,862 \\ \text{(To record unposted Drawings)} & & & \\ \end{array} }$$