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Boo is a subsidiary of Betty. At the year end Boo has a current account balance debit balance of $50,000, but Betty has a current account credit balance of only $40,000.
Which of the following two reasons might explain the difference?
1 Boo had posted a cheque for $10,000 to Betty on the last day of the year
2 Betty had posted a cheque for $10,000 to Boo on the last day of the year
3 Betty had despatched $10,000 of inventory to Boo on the last day of the year
4 Boo had despatched $10,000 of inventory to Betty on the last day of the year
A 1 and 3
B 1 and 4
C 2 and 3
D 2 and 4
Correct answer is D..I didnt understand what they mean in this question
Boo thinks that Betty owes 50,000 to them. Betty thinks that they owe 40,000 to Boo.
The two should be the same figure, but they are different because Boo has sent some inventory (and recorded it) but Betty has not yet received it and so Better has not recorded it.