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ACCA Applied Knowledge · Financial Accounting · Payables account reconciliations

Mirabel Co finds that it has not recorded an invoice of $2,800 from supplier Tarn Ltd for goods received before the year end. Which one of the following is the correct journal to correct this?

Debit Purchases $2,800 and credit the payables control account $2,800, with the individual supplier ledger account credited too. The goods were received before the year end, so the cost and the liability to the supplier must be recognised. No cash has been paid, so bank is not involved.

  1. ADebit Payables control account $2,800; credit Purchases $2,800
  2. BDebit Purchases $2,800; credit Payables control account $2,800Correct
  3. CDebit Tarn Ltd supplier account $2,800; credit Inventory $2,800
  4. DDebit Purchases $2,800; credit Bank $2,800

Explanation

Goods received before the year end are a purchase and a liability. Debit Purchases (or inventory) and credit the payables control account, with the supplier account in the ledger also credited. Option A reverses this. Option D wrongly assumes cash was paid.

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