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F3 control account question

Forums › ACCA Forums › ACCA FA Financial Accounting Forums › F3 control account question

  • This topic has 8 replies, 3 voices, and was last updated 9 years ago by secondstar.
Viewing 9 posts - 1 through 9 (of 9 total)
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  • January 21, 2016 at 6:49 am #296805
    myacca1990
    Participant
    • Topics: 153
    • Replies: 164
    • ☆☆☆

    Q:Angus received a statement of account from a supplier,Aberdeen ,showing a balance to be paid of $14,560 at 31 august 2001.Angus,s payables ledger account for aberdeen shows a balance due to Aberdeen of $12,160.
    Investigation reveals the following.
    1) A credit note received by angus for goods returned to Aberdeen has been incorrectly recorded in Angus,s books as $4,200 instead of $2,400.The credit note is correctly recorded on the statement from Aberdeen.
    2)Aberdeen has allowed Angus a cash discount of $150 which has not yet been recorded in Angus,s ledger account.
    What discrepancy remains between Angus,s and Aberdeen records after allowing for these items?
    A)$nil
    B)$150
    C)$750
    D)$4,350
    The correct answer is C but i cannot figure out why is he not subtracting 1800 and adding it instead ?

    January 21, 2016 at 7:38 am #296816
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    1) The Credit Note received should’ve reduced Angus’s A/P Control Account’s balance by 2,400. But, due to a transposition error, it reduced the balance by 4,200. Meaning 4200 is subtracted instead of 2400. So the balance is 1800 less than what it should’ve been.
    So, we’ll add the extra amount of 1800 which was subtracted by mistake.
    The A/P Balance would be: 12,160+1,800=13,960

    2) As its a cash discount, so it’ll definitely reduce the A/P balance. So, we’ll simply subtract 150 from the updated balance above.
    13,960-150=13,810

    The Discrepancy still remaining is:
    14,560-13810=750

    So, the correct answer is C)

    January 26, 2016 at 9:56 am #297955
    myacca1990
    Participant
    • Topics: 153
    • Replies: 164
    • ☆☆☆

    @secondstar said:
    1) The Credit Note received should’ve reduced Angus’s A/P Control Account’s balance by 2,400. But, due to a transposition error, it reduced the balance by 4,200. Meaning 4200 is subtracted instead of 2400. So the balance is 1800 less than what it should’ve been.
    So, we’ll add the extra amount of 1800 which was subtracted by mistake.
    The A/P Balance would be: 12,160+1,800=13,960

    2) As its a cash discount, so it’ll definitely reduce the A/P balance. So, we’ll simply subtract 150 from the updated balance above.
    13,960-150=13,810

    The Discrepancy still remaining is:
    14,560-13810=750

    So, the correct answer is C)

    Thanks buddy all clear:)

    January 27, 2016 at 9:20 am #298100
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    Your welcome…. 🙂

    February 1, 2016 at 4:53 pm #298875
    CYNTHIA
    Member
    • Topics: 10
    • Replies: 20
    • ☆

    The total of the list of balances in Adele payable ledger was 438,900 at 30th June 2008. This balance did not agree with Adele payabLe ledger control account balance. .The following errors were discovered, 1.A contra account of $980 was entered in the payable ledger control account but not in the payable ledger 2.The total of the purchases returns journal was under cast by $1000 3.An invoice for $4,344 was posted to the supplier’s account as $4,434..WHAT AMOUNT SHOULD ADELE REPORT IN IT’S STATEMENT OF FINANCIAL POSITION AS ACCOUNTS PAYABLE AT 30TH JUNE 2008 ? A.439,790 B.436,830 C.437,830 D.438,010. …please I am a bit confused with how the invoice of $4,434 was corrected,A detailed explanation thanks.

    February 2, 2016 at 10:21 am #298957
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    @osazuwacynthia
    Answer: C) $437,830

    Explanation:

    Payable Ledger Balance = 438,900
    Control Account balance not given, and the question asks for the Amount to be entered in Statement of Financial Position. This required amount can be found by reconciling the Payable Ledger balance with the Control Account balance. If only one balance is given i.e either Payable Ledger or Control Account (as in this question), we can simply use the rectified balance of the given one. This can be done by rectifying the errors found. So, in this question, we’ll rectify the errors found in Payable Ledger only.

    1. Contra of $980 not entered in Payable Ledger.

    As it is entered in the Control Account, but not in Payable Ledger, hence it will be entered in the Payable Ledger. As a Contra entry is made against a Receivable, hence it usually reduces the Payable Account balance, hence it also reduces the total balance of Payable Ledger. So, we’ll simply subtract it from the balance above.
    Payable Ledger Balance = 438,900-980 = $437,920

    2. Total of Purchase Returns Journal under-cast by $1,000.

    The totals from Day Books are posted to the Control Accounts while the individual lines (i.e Invoices and Credit Notes) are posted to the individual supplier/customer account in the Payable/Receivable Ledger.
    A mistake in posting the TOTAL means that an error is made in the Control Account. Hence, it’ll be rectified in the control account, and it has nothing to do with the Payable Ledger balance. We’ll simply be adding this amount to the Control Account Balance for rectification.

    3. An invoice for $4,344 was posted to the supplier’s account as $4,434.

    This mistake is made in the individual Supplier Account, so it has affected the total of the Payable Ledger. The invoice should have increased the supplier account balance by $4,344, but, by mistake the balance is increased by $4,434. Meaning $90 ($4,434-$4,344) MORE is present in the balance than what should have been. So, for the rectification we’ll have to simply SUBTRACT the excess amount of $90 from the balance.

    Payable Ledger Balance = $437,920-$90 = $437,830

    This is the rectified balance of Payable Ledger, and also the amount to be posted in the Statement of Financial Position.

    Hope it helped you.
    If you have any queries, feel free to ask.

    February 2, 2016 at 3:57 pm #298991
    CYNTHIA
    Member
    • Topics: 10
    • Replies: 20
    • ☆

    @secondstar thanks a lot..u have solved my problem on this topic.very comprehensive.

    February 2, 2016 at 7:45 pm #299025
    secondstar
    Member
    • Topics: 16
    • Replies: 220
    • ☆☆☆

    @osazuwacynthia said:

    @secondstar
    thanks a lot..u have solved my problem on this topic.very comprehensive.

    Your Welcome…. 🙂

    February 3, 2016 at 6:23 am #298987
    CYNTHIA
    Member
    • Topics: 10
    • Replies: 20
    • ☆

    @secondstar thanks a lot…your explanation have solved my problems on this topic

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