- 8 Marks
FA – L1 – Q47 – Control accounts and account reconciliations
Question
KRAIS Solutions
The balance on the trade payables control account is GH₵79,500,000. This does not agree with the sum of the balances on the accounts in the payables ledger.
On investigation, you discover the following errors:
(1) Purchases of GH₵1,850,000 from Vendor X have been recorded in the payables control account, but not in the vendor’s account in the payables ledger.
(2) A payment of GH₵2,000,000 to Vendor Y has been correctly recorded in the bank account in the ledger, but not in Vendor Y’s account in the payables ledger.
(3) A discount received of GH₵300,000 from Vendor Z has been recorded correctly in the payables control account, but not in Vendor Z’s account in the payables ledger.
(4) Purchase returns to Vendor W of GH₵1,500,000 have been correctly recorded in Vendor W’s account in the payables ledger, but have not been recorded at all in the main ledger.
Required
Prepare journal entries to correct the errors. (Note: When the error is in the payables ledger, only one entry, a debit or a credit, is required as a journal entry.)
State the correct total balance for trade payables.
Answer
Journal Entries to Correct Errors:
| Error | Debit (GH₵) | Credit (GH₵) |
|---|---|---|
| (1) Vendor X (Payables ledger) | 1,850,000 | |
| (2) Vendor Y (Payables ledger) | 2,000,000 | |
| (3) Vendor Z (Payables ledger) | 300,000 | |
| (4) Trade payables control account | 1,500,000 | |
| Purchase returns |
Correct Total Balance for Trade Payables:
Balance per trade payables control account: GH₵79,500,000
Less: Purchase returns not recorded (Error 4): GH₵1,500,000
Correct balance: GH₵78,000,000
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