After all the ledgers had been drawn up, the following differences and errors were identified. Indicate with a cross (X) where you would correct each of the differences and errors listed below, and explain your reasoning as so how, why and where you will make the correction: Hint: some might need to be corrected in more than one place. Difference or error Debtors control Debtors list E.g. The total sales return column in the Debtors Allowance Journal was posted to the debit side of the Debtors Control Account. X Sales returns reduce the amount owing by a debtor. The error has occurred in the Debtors control account only, thus there will be no impact on the individual debtor’s account. The debtors control account should be credited twice. A credit invoice (issued by the business) has not been recorded at all. The Debtors control column in the debtors journal was “undercast”. Notification has been received that the outstanding balance on one of the debtors should be written off as the debtor is insolvent.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
After all the ledgers had been drawn up, the following differences and errors were identified.
Indicate with a cross (X) where you would correct each of the differences and errors listed below,
and explain your reasoning as so how, why and where you will make the correction:
Hint: some might need to be corrected in more than one place.
Difference or error Debtors control Debtors list
E.g. The total sales return column in
the Debtors Allowance Journal was
posted to the debit side of the Debtors
Control Account.
X
Sales returns reduce the amount owing by a debtor.
The error has occurred in the Debtors control account
only, thus there will be no impact on the individual
debtor’s account. The debtors control account should
be credited twice.
A credit invoice (issued by the
business) has not been recorded at all.
The Debtors control column in the
debtors journal was “undercast”.
Notification has been received that the
outstanding balance on one of the
debtors should be written off as the
debtor is insolvent.
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