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Sir, I’m not sure about the wording of the following requirement. Can you please explain it? I’ll really appreciate if you can help me to understand this question. I’m much confused in it.
Which of the above errors should be dealt with as an adjustment to the list of balances from the
payables ledger?While carrying out the reconciliation of the balance on the payables control account in the general ledger with
the list of balances from the payable ledger, Celine discovered the following errors:(i) A payment of $1,700 in full settlement of a balance of $1,714 was correctly recorded on the supplier’s
account but only $1,700 was posted to the control account.(ii) The total of the purchase day book was understated by $900.
(iii) A supplier’s credit note was incorrectly recorded the daybook as an invoice.
(iv) No entries were made to record an arrangement to offset a balance of $620 against a balance in the
receivables ledger.(i) has been entered correctly in the payables ledger (which is where accounts are kept for each individual supplier), and so no adjustment is needed to the list of balances from the payables ledger.
(ii) the total of the purchase day book does not affect the payables ledger – totals are only used when entering in the control account. So the error affects the control account and does not affect the list of balances from the payables ledger.
(iii) This will affect the payables ledger because each individual entry in the daybook is entered in the suppliers account in the payables ledger. (It will also affect the control account because the total from the daybook will be wrong)
(iv) If the contra entry has not bee recorded then the balance on the suppliers account will be wrong and therefore the total of the balances in the payables ledger will be wrong.
All of this is explained in detail in my free lectures on Books of Prime Entry and the lectures on Control Accounts.
The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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