Write up the Suspense Account and prepare the Statement of Adjusted Net Income
Connie Francis is the owner of The Jetsetter an organic health food store. The firm’s trial balance failed to agree, and the difference was posted to a suspense account. The Income Statement then showed a net loss $77,250. A subsequent audit revealed the following accounting errors
The Closing Stock valued at $44,500 was taken as $64,500
Cash payment of $22,500 for office expenses was correctly posted in the cash account but was not posted in the expense account
The Opening Stock valued at $55,000 was taken as $95,000
Building repairs paid for $70,000 by cheque was not recorded in the books
The loan repayment of $25,000 was paid by cheque and correctly posted in the cashbook, but was debited to the loan interest account
An invoice for credit sales of $70,000 was posted in the sales account but was not posted in the sales ledger account
Rent expense of $30,000 paid by cheque was recorded as Dr Bank 30,000 and Cr Rent expense $30,000
New machinery costing $80,000 purchased by cheque was corrected recorded in the cashbook, but was Debited to the Machinery Repairs account