Mr. Patrick Mensah, a sole trader, has asked you to prepare the receivable and payable control accounts and ensure that the closing balances match with the list of balances. Currently, the closing balances as at 30 October 2017 are as follows:
GH¢
Receivables Control Account 126,845
Payables Control Account 103,240
Receivables list of balances 123,589
Payables list of balances 104,476
On investigation, the following have been discovered:
- A contra entry of GH¢3,250 has not been included in either control account.
- Bad debt of GH¢1,680 has been written off in the list of balances but has not been included in the receivables control account.
- The sales day book has been overstated by GH¢890 and this has not been reflected in the control account.
- Purchase returns to Taifa, a supplier of GH¢256 have not been reflected in the control account.
- An invoice amounting to GH¢981 for Obojo, a customer has been entered in the sales day book as GH¢891.
- A balance due to Amasaman, a supplier amounting to GH¢1,248 was not included in the list of balances.
- Payment received from Amrahia, a customer for GH¢2,864 was posted to a supplier account Manhia mistakenly. The payment was correctly accounted for in the control account.
- Goods purchased from a supplier Kasoa amounting to GH¢3,126 have been omitted from the relevant control account.
- Bad debt recovered of GH¢300 relating to Tantra has not been updated in the list of balances but has been included in the control account.
Required:
i) Based on the information provided above prepare the Receivables and Payables Control Accounts for the year-ended 30 October 2017. (8 marks)
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ii) Prepare a statement reconciling the list of balances with the revised control accounts for Receivables and Payables for the year-ended 30 October 2017. (2 marks)
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