The following errors were detected in the books of Shreay Ltd. while preparing the final accounts:(i) A Cheque received for ~ 3,100from Franc & Co. was dishonoured and debited to discount account(ii) The sales account has been totalled short by ~ 23,000(iii) Goods' of ~ 1,200 returned by Kumar & Sons were included in stock but no entry was made in the books.After rectifying above mistakes, net profit will. *
(a) Increase by ~ 24,900
(b) Decrease by ~ 24,900
(c) Increase by ~ 27300
(d) Increase by ~ 23,700
Well, it looks like Shreay Ltd. has a bit of a comedy of errors in their books! Let's break it down and find the answer to this accounting puzzle.
(i) First, we have a dishonored check from Franc & Co. that was mistakenly debited to the discount account. This means that the company actually lost out on ~ 3,100, which needs to be corrected.
(ii) Next, we have a sales account that has been short by ~ 23,000. Oops! It seems some money vanished into thin air. We definitely need to fix that.
(iii) Lastly, we have goods worth ~ 1,200 that were returned by Kumar & Sons but weren't recorded in the books. Well, those goods can't just magically disappear, can they? We have to make sure that their value is properly accounted for in the stock.
Now, after rectifying these mistakes, let's do some calculations. We add up the check amount ~ 3,100, the missing sales amount ~ 23,000, and the value of the goods ~ 1,200. That gives us a total correction of ~ 27,300.
So, the correct answer is (c) Increase by ~ 27,300. The net profit will enjoy a little boost after these blunders are fixed. Hopefully, Shreay Ltd. can laugh it off and have smooth sailing from here on out!