The trial balance of CX Trading as at 31 December 20×5 showed a difference which was posted to a suspense account. Drafted financial statements for the year ended 31 December 20×5 were prepared showing a net profit of $23,120. The following errors were subsequently found:
1. The purchase of a new van for $6,000 was included in the motor van expense account.
2. The debit side of the stationary account is undercast by $250.
3. There is a debit in the rent account of $400 but should be $4,000.
4. The rates on the owner’s home of $750 has been paid by the business and debited to the business’ rates account.
5. $720 included in the wages account of the business was in fact paid to the house keeper of the owner.
6. Purchases of inventory costing $500 paid by cheque had been totally missed out in the books.
7. Insurance paid by cheque of $150 was credited to both accounts.
a) The journal entries to correct the errors of the above. Narratives not required.
b) A statement of correcting the profit as found in the drafted financial statements.