Creditor Ledger balance of XYZ business as at 01.03.2014 are as follows;

Creditor Name	Value (Rs.)
Asitha	25,000.00
Visitha	44,000.00
Lasith	12,000.00
Total	81,000.00

The summary of the transaction done with the creditors during the month of March 2014 is given below;

Creditor	Purchases (Rs.)	Purchases Return (Rs.)	Payment (Rs.)	Discount Received (Rs.)
Asitha	160,000.00	-	130,000.00	6,000.00
Visitha	300,000.00	4,000.00	300,000.00	-
Lasitha	120,000.00	-	120,000.00	2,000.00
Rakitha	50,000.00	-	16,000.00	-
Total	630,000.00	4,000.00	566,000.00	8,000.00

As at 01.03.2014 the total of the creditors ledger balance agreed with the balance of the creditor control account. As at 31.03.2014 the total of the creditors ledger balance did not agree with the balance of the creditors control account. The reasons for this difference are given Below;

1. Discount received from Asitha for Rs. 3,000.00 have been debited to creditors control account and credited to discount received account. No other entries had been made in this regard.
2. Debited note of Rs. 4,000.00 sent to Visitha has not been recorded in his account.
3. Cash ssales of Rs. 20,000.00 have been credited to creditors control account.
4. Purchase invoice dated 28.03.2014 raised for goods purchased of Rs.12,000.00 from Muditha. Has not been recorded in the purchase journal.
5. The total of the purchase journal has been posted to the creditors control account as Rs. 603,000.00.

Requirement

Explain the process taken to reconcile control accounts and provide relevant control accounts with reconciliation statements to obtain the correct creditor balance in the accounts.

Answer rating: 100% (QA)

Step 1 In creditors Control Account adjustment 630000Purchase Less 20000 Cash sales ad... View the full answer