F3 Control Accounts

1. A company purchases all goods on credit. The following payables ledger control account contains some errors: Payables ledger control account Debit $ Purchases 963,200 Discounts received 12,600 Contras with amounts receivable in receivables ledger 4,200 Closing balance 410,400 –––––––– 1,390,400 ———— Credit $ Opening balance 384,600 Cash paid to suppliers 988,400 Purchases returns 17,400 –––––––– 1,390,400 ———— What should the closing balance be when the errors have been corrected?

$325200

$350400

$358800

$376800

The closing balance should be $325,200. This can be calculated by adjusting the errors in the payables ledger control account. The correct closing balance is obtained by subtracting the incorrect contra amount of $4,200 and the incorrect purchases return amount of $17,400 from the given closing balance of $410,400. Therefore, the correct closing balance should be $410,400 - $4,200 - $17,400 = $388,800. Since the payables ledger control account has a debit balance, this amount should be deducted from the opening balance of $384,600. Therefore, the correct closing balance is $384,600 - $388,800 = -$4,200. However, since the question asks for the closing balance in dollars, the negative sign is ignored. Hence, the correct closing balance is $4,200.

Explanation

The closing balance should be $325,200. This can be calculated by adjusting the errors in the payables ledger control account. The correct closing balance is obtained by subtracting the incorrect contra amount of $4,200 and the incorrect purchases return amount of $17,400 from the given closing balance of $410,400. Therefore, the correct closing balance should be $410,400 - $4,200 - $17,400 = $388,800. Since the payables ledger control account has a debit balance, this amount should be deducted from the opening balance of $384,600. Therefore, the correct closing balance is $384,600 - $388,800 = -$4,200. However, since the question asks for the closing balance in dollars, the negative sign is ignored. Hence, the correct closing balance is $4,200.

2. An inexperienced bookkeeper has drawn up the following payables ledger control account, which contains errors: Payables ledger control account Debit Balances $ Credit Balances $ Opening balance(amounts owed to suppliers) 212,500 Purchases 447,000 Cash paid to suppliers 491,000 Discounts received 2,700 Purchases returns 7,600 Contras against receivables ledger 12,800 Refunds received from suppliers 3,200 Closing balance 251,800 714,300 714,300 What should the closing balance be after correcting the errors made in preparing the account?

$148600

$276400

$171000

$254000

The closing balance should be $148,600 after correcting the errors made in preparing the account. This can be determined by subtracting the total credit balances ($714,300) from the total debit balances ($865,900) and taking into account the discounts received ($2,700) and refunds received from suppliers ($3,200). The correct calculation would be: $865,900 - $714,300 + $2,700 - $3,200 = $148,600.

Explanation

The closing balance should be $148,600 after correcting the errors made in preparing the account. This can be determined by subtracting the total credit balances ($714,300) from the total debit balances ($865,900) and taking into account the discounts received ($2,700) and refunds received from suppliers ($3,200). The correct calculation would be: $865,900 - $714,300 + $2,700 - $3,200 = $148,600.

3. Dee received a statement from one of its suppliers, Zed, showing a balance due of $9,440. The amount due according to the payables ledger account of Zed in Dee's records was $4,770. Comparison of the statement and the ledger account revealed the following. 1 A cheque sent by Dee for $3,700 has not been allowed for by Zed 2 The ledger account of Dee has not been adjusted for a cash discount of $80 disallowed by Zed because the payment was too late to earn the discount. What difference remains between the two companies' records after adjusting for these items?

$1050

$10430

$10590

$890

Zed statement: amount owed by Dee 9,440
Deduct: Cheque sent by Dee (3,700)
Adjusted balance 5,740
Balance in Dee’s payables ledger account for Zed 4,770
Adjusted for discount not allowed 80
Adjusted balance 4,850
Unexplained difference 890

Explanation

Zed statement: amount owed by Dee 9,440
Deduct: Cheque sent by Dee (3,700)
Adjusted balance 5,740
Balance in Dee’s payables ledger account for Zed 4,770
Adjusted for discount not allowed 80
Adjusted balance 4,850
Unexplained difference 890

4. A payables ledger control account showed a credit balance of $856,460. The payables ledger balances totalled $871,260. Which of the following possible errors could account in full for the difference?

$14,800 cash paid to a supplier was entered on the credit side of the supplier’saccount in the payables ledger.

The total of discounts received $7,400 has been entered on the credit side of thepayables ledger control account.

The correct answer is that the total of discounts allowed $31,300 was recorded as a debit entry in the payables ledger control account instead of the correct figure for discounts received of $16,500. This error would result in an overstatement of the credit balance in the payables ledger control account by $14,800 ($31,300 - $16,500), which accounts for the difference between the credit balance of $856,460 and the total of payables ledger balances of $871,260.

Explanation

The correct answer is that the total of discounts allowed $31,300 was recorded as a debit entry in the payables ledger control account instead of the correct figure for discounts received of $16,500. This error would result in an overstatement of the credit balance in the payables ledger control account by $14,800 ($31,300 - $16,500), which accounts for the difference between the credit balance of $856,460 and the total of payables ledger balances of $871,260.

5. The total of the list of balances in the payables ledger of Bounce on 30 June 2010 was $289,500. This balance did not agree with the payables ledger control account balance. The following errors were discovered. 1 The total of purchases returns was undercast by $3,000. 2 A contra entry of $690 was recorded in the payables ledger control account but not in the payables ledger. 3 An invoice for $8,720 was recorded in the supplier's account as $7,820. What amount should Bounce record in its statement of financial position as the amount of trade payables as at 30 June 2010?

$291090

$289710

$286710

$291510

Total of payables ledger balances 289,500
Contra entry not recorded in payables ledger (690)
Invoice under-stated in payables ledger (8,720 – 7,820) 900
Adjusted balance 289,710
This should be the correct balance in the payables ledger control account after the
error in recording total purchases returns is corrected.

Explanation

Total of payables ledger balances 289,500
Contra entry not recorded in payables ledger (690)
Invoice under-stated in payables ledger (8,720 – 7,820) 900
Adjusted balance 289,710
This should be the correct balance in the payables ledger control account after the
error in recording total purchases returns is corrected.