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The total of the list of balances in X’s payables ledgers was $438,900 at 30 Jun 2008. This balance did not agree with X’s payables ledger control account balance. The following errors were discovered:
1) A contra entry $980 was recorded in the payable ledger control account, but not in the payables ledger
2) The total of the purchase return journal was undercast by $1000.
3) An invoice for $4344 was posted to the supplier’s account as $4434.
What amount should X report in its Statement of Financial Position as accounts payable at 30 June 2008?
The ans is $438,900-90-900=$437,830.
I would like to know why #2 is no need to include in order to correct the errors of payables ledger (like to add $1000)?
As what I learnt is once we make a purchase on credit, we will list it on Payables Journal and the amount of invoice taken from Payables Journal will be entered in the account of relevant supplier in the Payable Ledger. Therefore that mean once the Payable Journal undercast by $1000, the amount entered into Payable Ledger will also be undercast by $1000 as the amount is taken from Payable Ledger. Is there any misunderstanding of my above logic, please correct if any.
Thanks!
The only place the totals of any of the books of prime entry are used is when we do the actual double entry in the nominal/general ledger (which includes the control accounts).
In the payables and receivables ledgers we are taking each individual amount (invoice, return etc..) and entering it on the individuals account. We do not use the total of the books at all in the payables and receivables ledgers.
Whilst carrying out reconciliation between the payables’ ledger control account and the payables’ ledger, Betty found that a purchase of goods for $575 had been recorded in the purchase day book as $557
How should this error be corrected in the payables’ ledger control account and the list of balances per the payables’ ledger?
The answer is control account credit $18 and list of ledger add$18
i am wondering why the list of ledger have to add $18 as we are taking the individual amount of the invoice to enter to the individual account. Therefore, why the incorrect entry of purchase day book would affect the list of ledger?
We are taking the figures for the payables ledger from the day book, not from the original invoice.
oh..i think i got it,after transfering transaction from day books to payables/receivable ledger(personal a/c)then the balance of those t-account (personal a/c)are listed in another part of the book which is list of balances.am i correct sir??
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