- This topic has 3 replies, 2 voices, and was last updated 10 years ago by
.
- Posts
Hallo,
I have the following example from an F3 book, and I don’t understand why item 1 (purchase returns below) is not used to get to the answer. If you have some idea, is this a mistake or there’s some reasoning for it?
Example:
The total of the list of balances in the payables ledger of Bounce on 30 June 2010 was $289,500. This balance did not agree with the payables ledger control account balance.The following errors were discovered.
1 The total of purchases returns was undercast by $3,000.
2 A contra entry of $690 was recorded in the payables ledger control account but not in the payables ledger.
3 An invoice for $8,720 was recorded in the supplier’s account as $7,820.What amount should Bounce record in its statement of financial position as the amount of trade payables as at 30 June 2010?
Solution:
Total of payables ledger balances 289,500
Contra entry not recorded in payables ledger (690)
Invoice under-stated in payables ledger (8,720 – 7,820) 900
Adjusted balance 289,710.Thank you!
The ledger is the book containing all the individual accounts for each separate payable.
The entries are recorded separately for each purchase, each cash payment, each separate return etc..The total of the returns (as with the total of purchases book, total of cash book etc.) is only used in the payables ledger control account. So the undercast would make the payables ledger control account balance wrong, but it does not affect the individual balances in the ledger.
Yes, as we are given the original payables ledger amount we make adjustments to it, and they are not asking us to correct the payables ledger control a/c, otherwise the only adjustment there would be the purchase retunrs, as the other two involve the payables ledger and not the payables ledger control a/c.
Thank you!
- You must be logged in to reply to this topic.