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Please help!
Frat Co is producing it’s year end accounts and has been looking at the payables control account. They have discovered the following has happened during the year:
1) Discounts received of 170 had been debited to a personal account.
2) A credit note of 350 had been omitted from the casting of the purchases day book.Before these discoveries, the balance on the payables control account was 19,560. What figure will be shown in the statement of financial position after these errors have been adjusted?
A) 19,210
B) 19,040
C) 19,560
D) 19,910And this one too!
Rush Co has a CREDIT balance of 54 in Jack Co’s receivables ledger: Which of these would explain this balance?
A) Rush Co received a credit note of 54 from Jack but Jack posted to the account of Twice Co.
B) Rush Co sent a cheque to Jack for 46 in respect of an invoice of 100
C) Rush Co paid an invoice of 54, even though this invoice was subsequently cancelled.
D) Rush Co bought but returned goods to Jack, totalling 54. A credit note is yet to be issued.Sorry, but I am not here just to give the answer to questions that you have been set, or that you have found somewhere!!!
If you want help answering them, then please do tell me where your difficulty is!
The answer to the first question is B
The answer to the second question is COk. Sorry! And Thank You for replying to them! I’ll be careful next time!
The difficulty in the first question was, I got the same answer B, but the book says the correct answer is A. and I just don’t know why is that.
And I clearly did not understand question 2.
But THANK YOU SO MUCH! Really appreciate! 🙂
The first question is terribly badly worded (and this will not happen in the real exam).
From the way it is worded, the discount has been entered in the individual account but not in the control account. In this case the correct answer is B.
The reason that your book says A is that they have assumed that it has been entered in the control account.With regard to the second question, we are thinking about Jack ‘s books. Jack thinks that he owes Rush 54 (a credit balance).
In answer C, Jack has invoiced Rush, but had then cancelled the invoice, and so Rush should not own him anything. However Rush has paid Jack (even though he doesn’t really owe anything) and so Jack owes the 54 back to Rush – a credit balance.
THANK YOU SO MUCH SIR! GOD BLESS! 🙂
I now totally understand! You’re a life savor 😀
I can’t get it. 🙁
can u please explain. (urgent)
Please!
A receivables ledger control account showed a debit balance of $37,642. The individual customers’ accounts in the receivables ledger showed a total of $35,840. The difference could be due to:
(A) undercasting of sales day book by $1,802
(B) overcasting the sales return day book by 1,802
(C) entering a cash receipt of $1,802
(D) entering a cash discount allowed of $901 on the debit side of the control accountThe answer is D. A discount allowed means that receivables are lower and so we should credit receivables. By debiting instead it makes the control account balance too high by 2 x 901 = 1802.
A is not the answer, because correcting it would mean sales should be 1802 higher which would mean a higher balance on the control account.
B is not the answer, because correcting it would mean returns should be 1802 lower which would mean a higher balance on the control account.
C is not the answer – just entering a receipt does not necessarily cause any problem.Wht does these mean
1. Undercasting of purchase day book
2. Purchase day book figure?Undercasting of PDB (which is also called payables journal) means that the total has been added up too small (it should be higher). (Casting means adding).
This will affect the control account because it is only there that we use the total.PDB figure means one figure in the book. (So if you are told that one figure is wrong, then the total of the book will be wrong (so wrong figure in the control account) but also the wrong figure will have been copied into the individual account as well, so the total of the list of balances will be wrong also.
I have the following quiestion:
Mary has a debit balance of $72,266 on the trade receivables control account,
which does not equal to the list of receivables balances figure of $70,659. The
accountant Jam found the following differences:
1. A contra of $7,296 with the trade payables control account was entered on the
wrong side of the trade receivables control account.
2. The sales day book was overcast by $2,500.
3. Discounts totaling $36,015 have been omitted from the control account.
4. A debt of $3,000 needs to written off and an allowance for receivables needs to
be adjusted to 2% of the remaining receivables balance.
5. A cash receipt for $20,000 has been omitted from the individual customers
account.
6. A customer invoice of $3,500 was entered into the ledger account as $35,000.How to solve it and write correctly during exams? I got $82470, but i am not sure about it.
Surely you have an answer to check to in whichever book you found the question??
(If not, then you should use a different book 🙂 )Item 1 affects the control account balance – to correct it you need to reduce the balance by 2 x 7296 = 14,592
Item 2 affect the control account balance. To correct it you need to reduce the balance by 2,500
Item 2 affects the control account balance. To correct it you need to reduce the balance by 36015.
Item 4 affect the control account balance and the list of balances. The both need reducing by 3,000 (the allowance is not relevant)
Item 5 affect the list of balances. It needs reducing by 20,000.
Item 6 affects the list of balances. It needs reducing by 31,500.
The correct answer is 16,159.
I do suggest that you watch our free lectures on Books of Prime Entry (our lectures are a complete course for Paper F3 and cover everything you need to be able to pass the exam well).
With regard to writing correctly during exams, question on this topic can only be asked in Section A of the exam. For Section A your workings are not marked – all that is marked is your choice of answer.
Thanks a lot for your reply. I had another answer, because I have difficulties distinguishing receivable control account balance, payable control account balance, list of balances, ledger balance etc. So I don’t fully understand what is going on there. For instance, in this question we have control payable accounts and payable ledger:
At 31 December 2011 Mary had a balance on the payables control account of
$22,550. The balance on their payables ledger was $20,650. The accountant found
the following discrepancies:
1. An invoice of $1,200 had been omitted from the control account.
2. The purchase day book total was overstated by $1,000.
3. Goods returned of $1,590 had not been recorded in the control account.
4. Discounts received of $10 had not been posted in the control account.
5. Contra entries of $500 need to be recorded in the control account.
Should I solve it the same way, as in reply above? And what answer will we get?Again, you must watch our free lectures on Books of Prime Entry – I cannot type out the whole lecture here.
The approach is the same.
As far as the answer is concerned, you must have an answer in the same book in which you found the question!!!
If you have specific problems with the printed answer then ask, but do not expect us to simply provide full answers here.Ok, then. But don’t blame me.
Payable control account:
22550
1200
(1000)
(1590)
(10)
———
21150List of balances:
20650
500
———
21150Correct? If not, where is my mistake?
It is correct except for item 5. The question says the entry has not been made in the control account and therefore it reduces the balance on the control account and does not affect the list of balances.
However, we are not here to simply provide answers to test questions.
You must have a printed answer in the book that you found the question in (if you haven’t then you should use a different book), and this forum is to give help to people who have watched our free lectures and don’t understand something either in the lecture or in answers to questions in their books.
Have you watched our free lectures?
(Although you do need to understand the two questions that you have typed out, you cannot be asked questions like this in the actual exam. This topic will only be asked in Section A as an MCQ and although you can be asked what the correct balance is, you cannot be asked to actually do a reconciliation)
Thank you for your reply. These questions were on my test, and I made mistakes. There are no answers to them, so I hoped this resource will help me to understand where I made these mistakes. You have already helped me a lot, so thank you.
Where I can find your free lectures connected with reconciliation?
You should watch all the lectures – they are a complete course.
(The principles involved in these lectures are dealt with in the lectures on Books of Prime Entry, as I wrote before.)
Sir can you pls tell how does the under/over casting of sales day book affect the control account and not the receivables ledger?
Because it is the total that is entered in the control account, and so if the total is wrong then so is the control account.
In the receivables ledger we enter each individual invoice separately and so the total of the day book being wrong has no effect in the ledger.
I do explain all this, with examples, in my free lectures on books of prime entry.
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