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ACCA Applied Knowledge · Financial Accounting · Payables account reconciliations

Which of the following differences between a supplier's statement and the payables ledger account would require Kestrel Co to make an adjustment in its own ledger?

An unrecorded supplier credit note requires an adjustment in the company's own ledger, because the ledger overstates the amount owed. Payments in transit are merely timing differences that already appear in the ledger, so no ledger entry is needed.

  1. ACash paid by Kestrel and recorded in its ledger but not yet received by the supplier
  2. BA credit note issued by the supplier but not yet recorded by KestrelCorrect
  3. CGoods sent by the supplier and invoiced but not yet received by Kestrel at the period end where Kestrel has recorded neither
  4. DAn invoice recorded by the supplier on the last day that Kestrel will receive the day after the period end, with the goods delivered after the period end

Explanation

A credit note from the supplier that Kestrel has not recorded means Kestrel's ledger overstates the amount owed, so Kestrel must post the credit note (debit payables, credit purchases or returns). A payment in transit is a timing difference needing no ledger adjustment. The other items concern timing of goods and invoice, not errors in Kestrel's records.

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