Payables Ledger – Knowsia

FA – L1 – Q47 – Control accounts and account reconciliations

Correct errors in trade payables control account and payables ledger with journal entries and state the correct total balance.

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

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Tags: Account Reconciliation, Control Accounts, Error Correction, Journal entries, Payables Ledger, Trade Payables
Level: Level 1

Topic: Control accounts and account reconciliations

FA – L1 – Q16 – Double entry bookkeeping

Prepare journal entries for Sparrow’s June 20X9 transactions in the main ledger.

Question

The following transactions in June are those of a new business entity, Sparrow.

June

Date	Transaction
1	Set up the entity with capital in cash of GH₵6,500,000 paid into a bank account.
2	Bought goods on credit from C. Jenkins GH₵1,800,000.
3	Credit sales: J. Finch GH₵660,000, D. Swan GH₵250,000, Swift Enterprises GH₵430,000. (Total: GH₵1,340,000).
4	Purchased goods for cash (by cheque) GH₵230,000.
5	Bought second-hand motor van for GH₵2,560,000, paying by cheque.
7	Paid motor expenses GH₵120,000.
9	Credit sales: M. Partridge GH₵240,000, Finch Traders GH₵260,000, G. Sparrow GH₵680,000. (Total: GH₵1,180,000).
11	Purchased goods on credit: C. Jenkins GH₵2,400,000, E. Dawson GH₵620,000, A. Ellis GH₵460,000. (Total: GH₵3,480,000).
13	Purchases returned to C. Jenkins GH₵250,000.
19	Sales returns from D. Swan GH₵110,000.
20	Cash drawings taken by owner: GH₵440,000 by cheque.
21	Payments made to E. Dawson GH₵620,000, A. Ellis GH₵460,000. (Total: GH₵1,080,000). All payments were made by cheque.
23	Received payment from J. Finch: GH₵660,000 by cheque.
25	Received payment from Swift Enterprises: GH₵430,000 in cash which was kept in the office.
28	Purchases returned to C. Jenkins: GH₵420,000.
29	Purchased stationery GH₵40,000 (record as a sundry expense) using cash.
30	Credit sales: D. Swan GH₵420,000, Finch Traders GH₵540,000. (Total: GH₵960,000).

Required
(a) Prepare journal entries to show how the following transactions in June 20X9 should be recorded in the main ledger accounts of Sparrow, a newly established business entity. The accounting system contains a receivables ledger and a payables ledger for individual accounts, and there are control accounts (Total: accounts) for receivables and payables in the main ledger. You are not required to include any narrative in the journal entries.

(b) List the transactions that will be entered in the receivables ledger accounts for the month.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Account Balances, Control Accounts, Credit Purchases, Payables Ledger, Payments, Purchase Returns
Level: Level 1

Topic: Control accounts and account reconciliations

FA – L1 – Q15 – Control accounts and account reconciliations

Record Kweku's May transactions in receivables and payables control accounts using T accounts.

Question

The following are the transactions of Kweku, who commenced a new business on 1 May.

May

Transaction	Details
1	Started the business with capital of GH₵2,500,000, paid into a business bank account.
2	Bought goods on credit from the following entities: Elliot GH₵810,000; Martinez Traders GH₵1,305,000; Grayson GH₵375,000; Legacy GH₵1,140,000; Linden GH₵960,000. (Total: GH₵4,590,000).
3	Sold goods on credit to: Benson Retail for GH₵753,000, Quickmart for GH₵1,120,000 and Sanders for GH₵3,080,000. (Total: GH₵4,953,000).
4	Benson Retail paid by cheque GH₵723,000 taking a discount of GH₵30,000 for early payment. Benson Retail had not been expected to take the discount when the goods were originally sold to them.
5	Sanders paid GH₵1,500,000 by cheque.
6	GH₵700,000 was paid to Elliot.
7	The following payment was made to Grayson: GH₵350,000. A discount of GH₵25,000 was received for early payment.
8	Paid carriage outwards: GH₵345,000.
9	Purchase returns to Legacy GH₵400,000.
10	Sales returns from Sanders: GH₵270,000.
11	Purchases on credit from Martinez Traders GH₵753,000; Legacy GH₵1,650,000. (Total: GH₵2,403,000).
12	Sold goods on credit to Quickmart GH₵1,005,000.

Kweku maintains control accounts for receivables and payables in the main ledger, and accounts for individual customers and suppliers in a receivables ledger and a payables ledger respectively.

Required
(a) Use T accounts to show how the relevant transactions will be recorded in the receivables control account and the payables control account in the main ledger of Kweku in May. (You are not required to prepare T accounts for any of the other main ledger accounts.)

(b) Show the list of balances in the receivables ledger after recording the above transactions.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Account Balances, Control Accounts, Discounts, Payables Ledger, Purchase Returns, Reconciliation
Level: Level 1

Topic: Control accounts and account reconciliations

AA – L2 – Q40 – Audit Evidence

Discuss the pros and cons of stating or not stating the balance in a confirmation letter to suppliers List substantive procedures to verify the amount of trade payables in the payables ledger. List substantive procedures to identify unrecorded liabilities in the payables ledger.

Question

n your audit procedures to date you have found a large number of misstatements in your client’s payables ledger. You have decided to write to a number of trade payables to obtain direct confirmation of the balances due.

Required
(a) The confirmation letter to the suppliers could either state the balance or ask the supplier to give the balance himself. Set out the arguments for each of these two approaches.

(b) List other substantive procedures which you could use to verify the amount of trade payables.

(c) List the substantive procedures you would carry out to discover the existence of unrecorded liabilities.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Evidence, Payables Ledger, Substantive Procedures, Unrecorded Liabilities
Level: Level 2

Topic: Audit Evidence

Tag (SQ): Payables Ledger

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FA – L1 – Q47 – Control accounts and account reconciliations

Correct errors in trade payables control account and payables ledger with journal entries and state the correct total balance.

FA – L1 – Q16 – Double entry bookkeeping

Prepare journal entries for Sparrow’s June 20X9 transactions in the main ledger.

FA – L1 – Q15 – Control accounts and account reconciliations

Record Kweku's May transactions in receivables and payables control accounts using T accounts.

AA – L2 – Q40 – Audit Evidence

Discuss the pros and cons of stating or not stating the balance in a confirmation letter to suppliers List substantive procedures to verify the amount of trade payables in the payables ledger. List substantive procedures to identify unrecorded liabilities in the payables ledger.

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FA – L1 – Q47 – Control accounts and account reconciliations

Correct errors in trade payables control account and payables ledger with journal entries and state the correct total balance.

You're reporting an error for "FA – L1 – Q47 – Control accounts and account reconciliations"

FA – L1 – Q16 – Double entry bookkeeping

Prepare journal entries for Sparrow’s June 20X9 transactions in the main ledger.

You're reporting an error for "FA – L1 – Q16 – Double entry bookkeeping"

FA – L1 – Q15 – Control accounts and account reconciliations

Record Kweku's May transactions in receivables and payables control accounts using T accounts.

You're reporting an error for "FA – L1 – Q15 – Control accounts and account reconciliations"

AA – L2 – Q40 – Audit Evidence

Discuss the pros and cons of stating or not stating the balance in a confirmation letter to suppliers List substantive procedures to verify the amount of trade payables in the payables ledger. List substantive procedures to identify unrecorded liabilities in the payables ledger.

You're reporting an error for "AA – L2 – Q40 – Audit Evidence"

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