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question from bpp mixed bank

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › question from bpp mixed bank

  • This topic has 9 replies, 2 voices, and was last updated 10 years ago by John Moffat.
Viewing 10 posts - 1 through 10 (of 10 total)
  • Author
    Posts
  • June 12, 2015 at 5:30 pm #256642
    Anonymous
    Inactive
    • Topics: 17
    • Replies: 36
    • ☆☆

    A payables ledger control account showed a credit balance of $768,420.
    The payables ledger balances totalled $761.200

    Which one of the following would fully account for the difference?

    A) A conta against a receivables ledger debit balance of $6390 has been entered on the credit side of the payables ledger control account.

    B) A total of discount allowed $28.400 was entered on the debit side of the payables ledger control account instead of the correct figure for discount received of $15620.

    C) $12780 cash paid to a supplier was entered on the credit side of the suppliers account in the payables ledger.

    D) The total of discount received $6390 has been entered on the credit side of the payables ledger controll account.

    The correct answer is B, however i do not know why as surely this would make the debit side bigger?

    Why is the answer not A or D?

    thanks again

    June 12, 2015 at 5:54 pm #256646
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Sorry, but either you have mistyped the question or there is a terrible typing error in the book.

    None of the four choices accounts for the difference os $7,220.

    Can you check that you have typed the original two totals in your first two lines correctly?

    June 13, 2015 at 2:45 pm #256733
    Anonymous
    Inactive
    • Topics: 17
    • Replies: 36
    • ☆☆

    sorry the payables ledger is 781200

    June 13, 2015 at 4:08 pm #256744
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Discount allowed should be in receivables, not in payables. So credit the payable control account to remove it.
    Discount received should appear in payables, so debit payables control account with it.

    The net effect is that the payables control account is credited with 28,400 – 15620 = 12780, which increases the current credit balance 768420 + 12780 = 781200

    June 13, 2015 at 5:52 pm #256756
    Anonymous
    Inactive
    • Topics: 17
    • Replies: 36
    • ☆☆

    i still dont understand sorry. If there is 12780 too much on the Debit side of this accounr wouldnt that reduce the credit balance. Wouldnt it be 12760 less than the ledger?

    thanks

    June 14, 2015 at 7:40 am #256784
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    And it is 12780 less than the ledger! When it is corrected it will be the same total as in the ledger.

    June 14, 2015 at 7:15 pm #256843
    Anonymous
    Inactive
    • Topics: 17
    • Replies: 36
    • ☆☆

    let me answer each one the way i thought maybe you can see the way im looking at it.

    A) This should have been entered on the debit side but was entered on the credit side so credit side overcast

    B)This error would increase the debit side of the controll account by 12780 too much and therefore reduce the credit side so this is not correct

    C) This error would mean the ledger is higher than the control account

    D) This would increase the control account on the credit side

    June 15, 2015 at 6:49 am #256896
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    But you have just written yourself why B is correct.

    The credit side of the control account is reduced by the error. Payables are a credit balance. Since the error reduced the credit side then the balance is too low by 12780.

    That is what the current position is – the balance on the control account is 12780 too low at 768420. It should therefor really be 781200 which then agrees with the list of balances from the ledger.

    June 15, 2015 at 5:25 pm #257067
    Anonymous
    Inactive
    • Topics: 17
    • Replies: 36
    • ☆☆

    omg im being really stupid thanks again!

    June 15, 2015 at 5:44 pm #257079
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    No problem 🙂

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