I’m not Understand how answer calculated, so please help me.
At 31 October the balance on the payables control account in Tim’s general ledger is $79,850 and the total of the
list of balances on the personal accounts is $79,310. Tim has discovered that the difference is because a payment
for $60 was entered correctly in the day book but was recorded as $600 on the supplier’s account.
What is the correct value of creditors to be reported on Tim’s statement of financial position at 31 October?
The Correct Answer is D
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Although the answer is correct, but the details in the question suggest a different answer.
In the Statement of Financial Position, we always report the correct amount of Payables. For this purpose, we usually reconcile Payables Control Account with Payables Ledger Balances.
If there’s any error in either of them, we have to correct at least one of them and use that balance to be included in SFP.
In this question, the Control Account balance is correct, the error is only in Payables Ledger. So, we should use Control Account balance for inclusion in SFP.
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