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A business commenced trading on 01 January 20X1. The following transactions with Supplier A have been recorded in the purchase ledger. 01 January 20X1
Opening balance $nil
(1) 01 January 20X1 Purchase of goods $50
(2) 01 February 20X1 Purchase of goods $435
(3) 30 March 20X1 Payment $385 31 March 20X1
Closing balance $100
On 31 March 20X1, the business receives the following statement from the supplier. Opening balance $nil
(4) 1 January 20X1 Invoice #365 $50
(5) 1 February 20X1 Invoice #490 $435
(6) 31 March 20X1 Invoice #533 $35 Closing balance $520
Which transactions should be noted as reconciling items on the supplier statement reconciliation at 31 March 20X1?
A 3 only B 6 only C 3 and 6 only D 1 to 6sir, please help me with this question irony understand the logic of it
We need to compare with the business shows in its own accounts with what the supplier thinks is owed to them on their statement. We should be able to explain why the two balances are different, because if there is not a good reason then someone has made a mistake and we would then need to correct the mistake.
There are two reasons why the final balances are different.
One is that have not recorded invoice #533 for $35, which will be because we have not yet received it since it was only sent on 31 March. However we had bought the goods and therefore do owe the money, which means we really owe a total of 100 + 35 = $135.The other reason is that we paid $385 on 30 March, but the supplier does not show the money as being received, which will be because it was only paid near the end of the period and the supplier had not yet got the money. The supplier obviously will soon receive the money and will then have us as owing 520 – 385 = $135.
So nobody has made any mistakes – we can explain why there is a difference and so we can reconcile. It is the two items I have listed that are needed to reconcile (i.e. explain) the balances.
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