You are the audit senior in charge of the audit of Blackburn Ltd., and you are auditing the company’s trade creditors at December 31, 2020. A junior member of the audit team has been checking suppliers’ statements against the balances in the accounts payable sub-ledger. He is unable to reconcile a material balance relating to Whitebone Ltd., and has asked for your help and suggestions on the audit work that should be carried out on the differences. The balance of Whitebone in Blackburn’s sub-ledger is shown below

Below are the details on Whitebone’s suppliers’ statement.

Whitebone’s terms of trade with Blackburn allow a 2-percent cash discount on invoices where Whitebone receives a cheque from the customer by the end of the month following the date of the invoice (that is, a 2-percent discount will be given on November invoices paid by December 31). On Blackburn’s sub-ledger, under “Status,” the cash and discount marked “Alloc. 1” pay invoices marked “Paid 1” (similarly for “Alloc. 2” and “Paid 2”). Blackburn’s receiving department checks the goods when they arrive and issues a receiving report. A copy of the report is sent to the accounts payable department.

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Supplier: Whitebone Ltd. Date Type Reference Status Dr Cr Balance April 10 Invoice 6004 Paid 1 2,130 Invoice Paid 1 April 18 6042 1,525 April 23 6057 Invoice Paid 1 2,634 May 4 Invoice Paid 2 6080 3,572 May 15 Invoice 6107 Paid 2 1,632 May 26 Invoice 6154 Paid 2 924 May 31 Payment Cheque Alloc. 1 6,163 Discount Alloc. 1 126 June 14 Invoice 6285 2,156 June 21 3,824 Invoice 6328 June 30 Payment Cheque Alloc. 2 6,005 Discount Alloc. 2 123 June 30 Balance 5,980 Customer: Blackburn Ltd. Date Type Reference Status Dr Cr Balance April 7 Invoice 6004 Paid 1 2,130 April 16 Invoice 6042 Paid 1 1,525 April 22 Invoice 6057 Paid 1 2,634 May 2 Invoice 6080 Paid 2 3,752 May 13 Invoice 6107 Paid 2 1,632 May 22 Invoice 6154 Paid 2 924 June 10 Receipt Cheque Alloc. 1 6,163 June 4 Invoice 6210 Alloc. 1 4,735 June 12 Invoice 6285 2,156 June 18 Invoice 6328 Alloc. 2 3,824 June 28 Invoice 6355 Alloc. 2 6,298 June 30 Balance 23,447