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ACCA Applied Knowledge · Financial Accounting · Payables account reconciliations

Kiln Co's payables ledger control account has a credit balance of $72,400 before adjustments. The following are found: (1) purchases day book was undercast by $1,000; (2) a contra entry of $2,500 with the receivables ledger was not posted in the control account; (3) returns outward of $800 were omitted from the control account. What is the corrected control account balance?

The corrected balance is $70,100. Start with $72,400, add $1,000 for the undercast purchases day book, deduct the $2,500 contra entry and deduct $800 of returns outward omitted from the control account. Both the contra and returns reduce the amount owed to suppliers.

  1. A$68,100Correct
  2. B$70,100
  3. C$68,900
  4. D$71,300

Explanation

Undercast purchases day book: credit control by $1,000, giving $73,400. Contra of $2,500 reduces payables: $70,900. Returns outward of $800 reduce payables: $70,100. So the balance is $70,100, which is option B. Check: 72,400 + 1,000 − 2,500 − 800 = 70,100.

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