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The Use of Double-Entry and Accounting SystemsSyllabus CControl Account Reconciliations

ACCA · Question 09 · The Use of Double-Entry and Accounting Systems

In a manufacturing company, the total of the list of balances from the payables ledger is $34,500, but the payables control account balance is $35,200. It is discovered that a purchase invoice for $700 was entered in the purchase day book but omitted from the supplier's individual account. How should this be resolved?

Answer options:

A.

Debit the control account with $700; make no adjustment to the list of balances.

B.

Credit the control account with $700; add $700 to the list of balances.

C.

Add $700 to the list of balances; make no adjustment to the control account.

D.

Deduct $700 from the list of balances; make no adjustment to the control account.

How to approach this question

Determine where the error occurred. The purchase day book total goes to the control account (so it's correct). The individual entry goes to the personal ledger (so it's missing there).

Full Answer

C.Add $700 to the list of balances; make no adjustment to the control account.✓ Correct
The purchase day book total is posted to the payables control account. Since the invoice was entered in the day book, the control account is correct ($35,200). The omission was in the individual supplier's account in the payables ledger. Therefore, $700 must be added to the list of balances (34,500 + 700 = 35,200), reconciling the two figures.

Common mistakes

Adjusting the control account when the error only occurred in the memorandum ledger.
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