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Hello sir. I will be appearing for my FR exam in 2 weeks. I am in major confusion regarding this adjustment. PLEASE HELP.
Pyramid sells goods to Square at cost plus 50%. Below is a summary of the recorded activities for the year ended 31 March 20X2 and balances as at 31 March 20X2:
Pyramid ($000) Square ($000)
Sales to square 16000
Purchases from pyramid 14500
Included in Pyramids receivables 4400
Included in Squares payables 1700On 26 March 20X2, Pyramid sold and despatched goods to Square, which Square did not record until they were received on 2 April 20X2. Square’s inventory was counted on 31 March 20X2 and does not include any goods purchased from Pyramid.
On 27 March 20X2, Square remitted to Pyramid a cash payment which was not received by Pyramid until 4 April 20X2. This payment accounted for the remaining difference on the current accounts.
Please help sir!
Thank you.Hi,
Which bit of the question is causing you major confusion? If you let me know then I can explain it for you.
Thanks
OK, I’m not going to just answer an entire question for you as I’m not here for that. I’m here to facilitate your learning. So let’s work this together and deal with the cash in transit first in the second part of the question. The difference between the current accounts (receivables ad payables) is 2,700 (4,400 – 1,700) and this is the cash in transit. How do you deal with cash in transit?
Get back to me with an answer and we can see how you are getting on and move on to the next steps.
Good luck!
Qiyamet wrote:Dr cash in transit
cr payablesYou are correct with the DR entry but the CR entry is to receivables and not payables.
fredymalia: Thank you for your interest, but we are not in need of more moderators at present.
While writing, I must ask you to stop advertising for Study Buddies for every ACCA paper, and to stop answering question in the Ask the Tutor Forums – that is only for our tutors to do 🙂
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