1
The following points were discovered in the books of a small building business before the
closing entries had been made. Draft financial statements had already been prepared and showed
a net profit of £23,120.
(i) The purchase of a new van for £6,000 was included in the motor vehicle expenses account.
(ii) The drawings account included £250 for the purchase of fuel which was used to heat the business
offices.
(iii) £300 paid by a customer, B Burton Ltd, had been credited to B Struton’s account in error.
(iv) The water rates on the proprietor’s home of £750 has been paid by the business and debited
to the business rates account.
(v) £720 included in the wages account was paid to workmen for building a greenhouse in the
proprietor’s garden.
(vi) Building materials bought on credit from K Jarman for £500, has been delivered to the business
on the balance sheet date and had been included in the stock figure at that date, but the
invoice for these goods had not been entered in the purchases day book.
Required:
(a) The journal entries to record the necessary adjustments arising from the above.
(b) A statement showing the effect of these adjustments on the profit shown in the draft financial
statements.