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Patrick is preparing a reconciliation between the total of the list of balances from his receivable ledger which is $37552 and the balance on the receivable ledger control account which is $38842.
He has found that the following errors have been made
(I) a debit balance of $1200 was omitted from the list of balances
(II) a credit note for $ 375 was recorded in the daybook as an invoice and
(III) the total of the sales invoices in the sales day book was overstated by $90
What is the reconciled value of receivables ?
A) $38002
B) $38377
C) $38752
D) $38842
Correct Answer is A. My answer was C.SIR my question is that SECOND error shows correction in both List of Balances and Control Account so how will be detected in Reconcilation. We should not do correction of this in both but here it is dealing with second error in both control account and list of balances.
(I) Affects the list of balances which should be 37,552 + 1,200 = 38,752
(II) Affects both as both the posting from the individual line in the day book and the total will be wrong by 375 x 2. Both should be reduced by 750.
List = 38752 – 750 = 38002; control account = 38843 – 750 = 38092
(III) Affects onlt the SLCA/c as the SDB total is used to post to that account. Needs to be reduced to 38092 – 90 = 38002
Both now agree at 38002.
(II) Won’t be naturally be detected by the reconciliation process, but the error was found so needs to corrected. It would have been a better question if it had asked something like “What is the reconciled and correct amount for receivables”.
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