On 31 March 2023 , Polokwane Traders received a statement from Messina Traders, a creditor. The balance in the creditors ledger of Polokwane Traders was R12 667 (credit). The statement received from Messina Traders showed a debit of R 21 083. The following discrepancies were discovered: • Purchases returns of R 833 had been debited in the creditors’ ledger of Polokwane Traders. The statement from Messina Traders showed no such records. • Cheque number C1OO, dated March 2023, amounting R 10 250 was debited inthe creditors ledger of Polokwane Traders but did not appear in the statement received from Messina Traders. • Invoice number IV 187 dated March 2023, amounting to R 4 750, was entered incorrectly into the statement received from Messina Traders as R 6 250. • Invoice number IV 200 dated March 2023 amounting to R 4 167 was credited in the creditors ledger of Polokwane Traders but did not appear in the statement of Messina Traders. Required: Show how the above errors can be corrected in the creditors’ reconciliation statement of Polokwane Traders 7 April 2023
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.
On 31 March 2023 , Polokwane Traders received a statement from Messina Traders, a
creditor. The balance in the creditors ledger of Polokwane Traders was R12 667 (credit).
The statement received from Messina Traders showed a debit of R 21 083.
The following discrepancies were discovered:
• Purchases returns of R 833 had been debited in the creditors’ ledger of Polokwane
Traders. The statement from Messina Traders showed no such records.
• Cheque number C1OO, dated March 2023, amounting R 10 250 was debited inthe
creditors ledger of Polokwane Traders but did not appear in the statement received
from Messina Traders.
• Invoice number IV 187 dated March 2023, amounting to R 4 750, was entered
incorrectly into the statement received from Messina Traders as R 6 250.
• Invoice number IV 200 dated March 2023 amounting to R 4 167 was credited in the creditors ledger of Polokwane Traders but did not appear in the statement of
Messina Traders.
Required:
Show how the above errors can be corrected in the creditors’ reconciliation statement
of Polokwane Traders 7 April 2023
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