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Q. 4. The total of the list of balances in Adele’s payables ledger was $438,900 at 30 June 2008. This balance did not agree with Adele’s payables ledger control account balance. The following errors were discovered:
(1) A contra entry of $980 was recorded in the payables ledger control account, but not in the payables ledger.
(2) Te total of the purchase returns journal was undercast by $1,000.
(3) An invoice for $4,344 was posted to the supplier’s account as $4,434.
What amount should Adele report in its Statement of Financial Position as accounts payable at 30 June 2008?
The right answer is: 438,900–980-90=437,830
Why we ignore purchase returns?Hello Olga,
we don’t take into account $1000 because it doesn’t affect your payables account.
when you have an undercast (understated) error, that means one side of transaction was done, but the second is missing
so in our case accountant did in payables account Dr $1000, but forgot to do Cr $1000 in Purchases.hope this helps.
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