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Alpha received a statement of account from a supplier Beta, showing a balance to be paid of $8,950. Alpha’s purchase ledger account for Beta shows a balance due to Beta of $4,140.
Ref: CBE Demo Question #47
Investigation reveals the following:(1) Cash paid to Beta $4,080 has not been allowed for by Beta
(2) Alpha’s ledger account has not been adjusted for $40 of cash discount disallowed by BetaWhat discrepancy remains between Alpha’s and Beta’s records after allowing for these items?
The answer m getting is, after adjusting Alpha payable account by 40 i got 4100 balance and on Beta’s Receivale account after adjusting 4080 i got 4870 balance
thus the discrepeny remains to me between two accounts is of 770. But this not seems to be right answer.
How should i approach the question?Hi,
Please try:
8950-4080 = 4870
4140+40 =4180Discrepancy after adjustment: 4870-4180 = 690
Q.17: At 30 June 20X5 a company’s allowance for receivables was $39,000. At 30 June 20X6 trade receivables totalled $517,000. It was decided to write off debts totalling $37,000 and to adjust the allowance for receivables to the equivalent of 5% of the trade receivables based on past events.
What figure should appear in the income statement for the year ended 30 June 20X6 for these items?
Given answer is answer 22000Can anyone explains the answer n working in simple words
The expense in the income statement will be the cost of the irrecoverable debts, plus/minus the change in the allowance.
The allowance at X6 will be 5% x (517000 – 37,000) = 24000
At X5 the allowance was 39000, and so it needs to be reduced by 15000 – this is a saving (negative expense)
So the total expense is 37000 (the irrecoverables) – 15000 (the reduction in the allowance) = 22000
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