Accounting Practice
Content
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1. A computer purchased on 1 October 2009 for $3,500 was entered into the bank and computer equipment ledgers as $350. 2. At the year-end Shayla had not yet depreciated her computer equipment. Her policy is to depreciate equipment 25% reducing balance with a proportionate charge in the year of acquisition. 3. A payment for stationery for cash of $440 was debited to the stationery account as $780. 4. Inventory purchased for $1,000 on credit had been posted to rent and rates. 5. Discounts given to credit customers as a reward for early payment of $1,310 have been recorded on the wrong side of the discounts allowed ledger account. 6. Commission received of $125 has been recorded as a debit in the commission received account. 7. Rental income of $3,742 has only been recorded in the bank ledger account. 8. The debit side of the utilities ledger account has been undercast by $600. 9. Shayla made cash drawings of $400 in the year; this has been recorded on the credit side of the purchases account but correctly posted to the cash account. 10. A contra made between the trade payables and trade receivables control accounts of $1,250 has been debited to both accounts.
http://instant.gbg.runaware.com/SageUK/50Accounts2013/testdrive.aspx?uxId=d8677ef0-76cf4d2d-8f4c-7d0293d45159
Control A/C
Example 1
At the financial year-end 31 December 2007 Explorer Rain Wear had a balance on the payables control account of $22,550. The balance on their payables ledger was $20,650. The accountant found the following discrepancies: 1. An invoice of $1,200 had been omitted from the control account. 2. The purchase day book total was overstated by $1,000. 3. Goods returned of $1,590 had not been recorded in the control account. 4. Discounts received of $10 had not been posted in the control account. 5. Contra entries of $500 need to be recorded in the control account. Required: After adjusting for these errors, what is the adjusted control account balance and adjusted list of balances?
Example 2
Benji has a debit balance of $72,266 on the trade receivables control account, which does not agree with the list of receivables balances figure of $70,659. The accountant found the following discrepancies: 1. A contra of $7,296 with the trade payables control account was entered on the wrong side of the trade receivables control account. 2. The sales day book was overcast by $2,500. 3. Discounts totaling $36,015 have been omitted from the control account.
4. A debt of $3,000 needs to written off and an allowance for receivables needs to be adjusted to 2% of the remaining receivables balance. 5. A cash receipt for $20,000 has been omitted from the individual customers account. 6. A customer invoice of $3,500 was entered into the ledger account as $35,000. Required: Reconcile the control account to the list of receivables balances.
CHAPTER 10 – CONTROL ACCOUNT RECONCILIATIONS
www.studyinteract ive.org 95
Example 3
Gaga Co. receives a supplier statement from Rihanna Co. The balance on Rihanna Co’s account in the books of Gaga Co shows an amount outstanding of $118,000. However, according the supplier statement it shows an amount outstanding of $138,000. The accountant has investigated into the difference and has found the following issues: 1. Goods returned to the supplier worth $15,000 have not been reflected in the supplier statement. 2. Discounts of $500 have been disallowed by Rihanna Co. 3. Rihanna has made an agreed contra entry of $5,000 with the amounts owed by Gaga Co. Gaga Co has not recorded this entry in its books. 4. A payment made to Rihanna Co. of $9,500 has not been reflected in the supplier statement. Required: What is the correct amount owed to Rihanna Co. after adjusting for the above issues?
Example 4
Michael’s receivables ledger control account does not agree with the list of receivables balances. Upon investigation Michael discovered the following errors: 1. The sales returns day book was under cast by $4,000. 2. A credit note has been entered into the sales returns day book as $530 instead of $350. 3. An irrecoverable debt has only been written off in the individual customer account. 4. A contra entry has only been entered into the control account. 5. The total of the discounts allowed column in the cash receipts book has been overcast by $250. 6. The total of the receivables column in the cash receipts book has been entered into the wrong side of the control account. Required: Which of the above errors would cause a difference between the control account balance and the total of the list of receivables balances?
1. A computer purchased on 1 October 2009 for $3,500 was entered into the bank and computer equipment ledgers as $350. 2. At the year-end Shayla had not yet depreciated her computer equipment. Her policy is to depreciate equipment 25% reducing balance with a proportionate charge in the year of acquisition. 3. A payment for stationery for cash of $440 was debited to the stationery account as $780. 4. Inventory purchased for $1,000 on credit had been posted to rent and rates. 5. Discounts given to credit customers as a reward for early payment of $1,310 have been recorded on the wrong side of the discounts allowed ledger account. 6. Commission received of $125 has been recorded as a debit in the commission received account. 7. Rental income of $3,742 has only been recorded in the bank ledger account. 8. The debit side of the utilities ledger account has been undercast by $600. 9. Shayla made cash drawings of $400 in the year; this has been recorded on the credit side of the purchases account but correctly posted to the cash account. 10. A contra made between the trade payables and trade receivables control accounts of $1,250 has been debited to both accounts.
http://instant.gbg.runaware.com/SageUK/50Accounts2013/testdrive.aspx?uxId=d8677ef0-76cf4d2d-8f4c-7d0293d45159
Control A/C
Example 1
At the financial year-end 31 December 2007 Explorer Rain Wear had a balance on the payables control account of $22,550. The balance on their payables ledger was $20,650. The accountant found the following discrepancies: 1. An invoice of $1,200 had been omitted from the control account. 2. The purchase day book total was overstated by $1,000. 3. Goods returned of $1,590 had not been recorded in the control account. 4. Discounts received of $10 had not been posted in the control account. 5. Contra entries of $500 need to be recorded in the control account. Required: After adjusting for these errors, what is the adjusted control account balance and adjusted list of balances?
Example 2
Benji has a debit balance of $72,266 on the trade receivables control account, which does not agree with the list of receivables balances figure of $70,659. The accountant found the following discrepancies: 1. A contra of $7,296 with the trade payables control account was entered on the wrong side of the trade receivables control account. 2. The sales day book was overcast by $2,500. 3. Discounts totaling $36,015 have been omitted from the control account.
4. A debt of $3,000 needs to written off and an allowance for receivables needs to be adjusted to 2% of the remaining receivables balance. 5. A cash receipt for $20,000 has been omitted from the individual customers account. 6. A customer invoice of $3,500 was entered into the ledger account as $35,000. Required: Reconcile the control account to the list of receivables balances.
CHAPTER 10 – CONTROL ACCOUNT RECONCILIATIONS
www.studyinteract ive.org 95
Example 3
Gaga Co. receives a supplier statement from Rihanna Co. The balance on Rihanna Co’s account in the books of Gaga Co shows an amount outstanding of $118,000. However, according the supplier statement it shows an amount outstanding of $138,000. The accountant has investigated into the difference and has found the following issues: 1. Goods returned to the supplier worth $15,000 have not been reflected in the supplier statement. 2. Discounts of $500 have been disallowed by Rihanna Co. 3. Rihanna has made an agreed contra entry of $5,000 with the amounts owed by Gaga Co. Gaga Co has not recorded this entry in its books. 4. A payment made to Rihanna Co. of $9,500 has not been reflected in the supplier statement. Required: What is the correct amount owed to Rihanna Co. after adjusting for the above issues?
Example 4
Michael’s receivables ledger control account does not agree with the list of receivables balances. Upon investigation Michael discovered the following errors: 1. The sales returns day book was under cast by $4,000. 2. A credit note has been entered into the sales returns day book as $530 instead of $350. 3. An irrecoverable debt has only been written off in the individual customer account. 4. A contra entry has only been entered into the control account. 5. The total of the discounts allowed column in the cash receipts book has been overcast by $250. 6. The total of the receivables column in the cash receipts book has been entered into the wrong side of the control account. Required: Which of the above errors would cause a difference between the control account balance and the total of the list of receivables balances?
