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QUESTION 45
While carrying out the reconciliation of the balance on the payables control account in the
general ledger with the supplier’s statements, Darum discovered the following errors:
(i) A supplier’s statement had not accounted for cash in transit of $300.
(ii) The total of the purchase day book was overcast by $2,000.
(iii) Darum took a settlement discount of $3,777 that was not allowed by the supplier on
their statement as the payment was late.
Which of the above errors require a correcting entry in the control account?
A (i) and (ii) only
B (ii) and (iii) only
C (iii) only
D All of the above
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(i) A supplier’s statement had not accounted for cash in transit of $300.
this is accounted in the cash book but not accounted by the supplier so not a control account adjustment
(ii) The total of the purchase day book was overcast by $2,000.
this is a control account adjustment as the posting has been wrong to the control account initially
(iii) Darum took a settlement discount of $3,777 that was not allowed by the supplier on
their statement as the payment was latethis is a control account adjustment as the control account is recorded with a discount which wasn’t allowed by the supplier and needs to be added back as a liability again
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so the answer is B
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