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Hi could you please help me with this question?
The following extracts of the statement of financial position are provided for P and S at 31 December 20X4:
P S
Receivables $100,000 $80,000Payables $60,000 $30,000
At 31 December 20X4 P owed $10,000 to S. This didn’t agree to the receivable in S, due to a $6,000 cheque paid by P at the year end which S did not receive until January 20X5.
What will the total receivables and payables figure be in the consolidated statement of financial position as at 31 December 20X4?
thanks a lot
i dont know whether i am right or wrong but wouldnt it be
receivables (100000+80000-6000-10000)= 164000
payables (60000+30000-10000)= 80000
bank( xxx+6000)
You are right according to the solution in the book but I don’t understand why are we subtracting 10000? the question says At 31 December 20X4 P owed $10,000 to S.
After S received 6000 from P, shouldn’t the remaining balance be 4000? which would then be subtracted from the receivables and payables?let me help you with this which will help you in the exam
first do you agree that the payable balance in the parent would be 16000 before paying the 6000?? since he paid 6000 so now it shows 10000 in his payables..
now further if we want to remove intra group transactions then we will have to remove from receivables too..so first will remove 6000 from receivables of subsidiary since parent has removed ..now we have to set off the remaining 10000 from both the entities..ok?
ohh ok I get it now. I thought the 10000 includes the 6000 paid by parent.
thanks a lot
Another question
If P sells goods worth 50 to S and S sells all of them to third party by the end of reporting period there will be no unrealized profit to adjust, right?
Yes no unreliazed profit but we will have to remove the 50 from revenue and cost of sales as intra group..
raahul
This page where you have thoughtfully stepped in to help Arooba …….
…….please tell me, what’s the title of this forum?
its ask the tutor and i am sorry for trying to help arooba as i am not a tutor but i just tried to resolve the problem as i had some idea about it so thought of helping out..
And if you had been wrong?
You said yourself in your first post “i dont know whether i am right or wrong”
If you had been wrong, not only would I have to undo the confusion you would create an d persuade your victim that you were wrong and I was right, I would also be faced with having to persuade you the same
Very happy that you contribute to the site and try to help others but, please, restrict your input to the general forums
OK? 🙂
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