Question

Problem 86 In the books of Beveridge Ltd the creditors ledger control account shows as at 31 December 2017 a credit balance of £321,700. The list of individual creditors' balances extracted from the creditors ledger on the same date shows credit balances totaling £330,800. The following errors have been identified since then: (1) A debit balance of £1,700 in a supplier's account has been listed in error as a credit balance. (2) A credit note received from a supplier for £3,600 is still to be accounted for. (3) A cash payment to a supplier of £250 was correctly recorded in the cash book but was entered as £520 in the creditors ledger (4) An invoice for £600 recorded in the purchases day book was not recorded in the supplier's account in the creditors ledger (5) A returns outwards day book page has been totalled as £43,000 instead of £40,000 (6) The remainder of the errors arose from the failure to post a payment to a supplier's account. Required: (a) Calculate the corrected creditors ledger control account balance, and, (b) reconcile this with the total of the individual creditors' balances in the creditors ledger.

Answer 1

Answer 1.

a. Correct creditors ledger correct account balance is:

	Credit balance
Creditors Ledger Control account	321,700
2. Deduct credit note of 3,600	-3,600
5. Wrong return outwards	3,000
Correct control account balance	321,100

(b) reconciliation is:

Individual creditors balance	330,800
1. Deduct 1,700+1,700	-3,400
2. Deduct credit note of 3,600	-3,600
3. Add extra amount shown as debit in creditor ledger	270
4. Invoice not recorded in creditor ledger	600
6. payment not recorded	-3,570
Correct balance	321,100

Answer 2.

Ending inventory in units = 750-600 = 150 units

Ending inventory FIFO = 50*4 + 100 * 3.50 = 550

Ending inventory LIFO = (100*2)-(80*2)+(200*2.50)-(70*2.50)+(300*3)-(250*3)+(50*4)-(50*4)-(50*3)-(100*2.5)+(100*3.5) = 465

Ending inventory weighted avg =

Weighted average cost per unit =[(100*2) + (200*2.5) +(300*3)+(50*4)+(100*3.5)] / (100+200+300+50+100)]

Weighted average cost per unit = $2.87

Ending inventory = Ending inventory in Units*Weighted average cost per unit

Ending inventory = 150*2.87 = 430.50