ExpertMedium2 marksMultiple Choice
ACCA · Question 16 · Supplier Statement Reconciliation
A company's payables ledger control account shows a balance of $85,000. A supplier statement from SteelWorks Ltd shows a balance due of $12,500, but the company's individual ledger account for SteelWorks Ltd shows a balance of $10,000. The difference is due to a payment of $2,500 made by the company on 30 December, which SteelWorks Ltd did not receive until 4 January. What adjustment is required to the company's payables ledger control account?
A company's payables ledger control account shows a balance of $85,000. A supplier statement from SteelWorks Ltd shows a balance due of $12,500, but the company's individual ledger account for SteelWorks Ltd shows a balance of $10,000. The difference is due to a payment of $2,500 made by the company on 30 December, which SteelWorks Ltd did not receive until 4 January. What adjustment is required to the company's payables ledger control account?
Answer options:
A.
Debit the control account by $2,500.
B.
Credit the control account by $2,500.
C.
No adjustment is required.
D.
Debit the control account by $12,500.
How to approach this question
Determine whose records are 'wrong' or missing information at the year-end date. If the company has already recorded the payment, their books are correct.
Full Answer
C.No adjustment is required.✓ Correct
This is a timing difference (cash in transit). The company correctly recorded the payment of $2,500 in its cash book and payables ledger before the year-end. The supplier statement is higher because they haven't received the cash yet. Since the company's records are already correct, no adjustment is needed to the company's accounts.
Common mistakes
Adjusting the company's books for a timing difference that only affects the supplier's statement.
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