Question

At 31 October the balance on the payables control account in Mark’s general ledger is $79,850 and the total of the list of balances on the personal accounts is $79,310. Mark has discovered that the difference is because a payment for $60 was entered correctly in the day book but was recorded as $600 on the supplier’s account.

Required:

Calculate the correct value of creditors to be reported on Mark statement of financial position at 31 October.

(10 marks)

Answer 1

Solution:

The correct value of creditors to be reported on Mark statement of financial position at 31st October is $79,850

Control accounts generally contains summary of accounts, so payables control accounts contains balance of $79,850 is summary of suppiler's accounts and not details of each purchase transactions, so Total of personal accounts of suppliers should be equal to total of payables control account.

In this case there is difference of $540 , because of wrong amount posted in supplier's account. but it was correctly posted in day book. As we know Transactions of day book are directly reflect in control accounts , so balance of payables control account is correct, so Correct value of creditors is $79,850.

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