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A payables ledger control account showed a credit balance of $768,420.
The payables ledger balances totalled $761.200Which 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
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?
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sorry the payables ledger is 781200
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
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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
And it is 12780 less than the ledger! When it is corrected it will be the same total as in the ledger.
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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
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.
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omg im being really stupid thanks again!
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