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The balance of $37564 in a firm’s purchases ledger control account did not agree with the total of the payable balances listed at the same date. Upon investigation, the following errors were discovered:
– A refund of $140 received from a credit supplier because of an overpayment had been posted to the wrong side of the control account.
– Return outwards of $310 had also been posted to the wrong side of the control account
– The list of balances had been undercast by $200
– Discount received of $276 were not recorded in the control account.
The correct credit balance on the purchases ledger control account is?
Errors 1,2 & 4 will require adjustments in the Control Account while error 3 will be adjusted in list of balances.
1) The entry of receiving the refund should have been,
Dr Cash $140
Cr Payables Control Account $140
But instead, the Control Account was DEBITED. For correction, we’ll simply make a credit entry with $240.
2) Same treatment as above. Control Account will be debited with $620.
4) To record Discounts Received, we’ll simply debit the control account with $276.
Control Account Balance = $37564+$240-$620-$276 = $36908
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