NSC Accounting Creditors’ reconciliation with the creditor’s statement: 1.1 Choose the correct answer fr

Question

1.1 Choose the correct answer from the words provided within brackets. Write only the answer, next to each number (1.1.1–1.1.4) in the ANSWER BOOK.

1.1.1 A stale cheque, one that is more than 6 months old, must be cancelled in the (Cash Receipts Journal/Cash Payments Journal).

1.1.2 A (debit/credit) balance on the bank statement indicates an overdraft.

1.1.3 A (debit note/credit note) is offered when accounts are settled within a certain time.

1.1.4 A (cash discount/trade discount) is offered when accounts are settled within a certain time.

1.2 DEBTORS RECONCILIATION AND AGE ANALYSIS
The information below relates to JT Traders for June 2017.

REQUIRED:
1.2.1 Calculate the correct Debtors Control balance on 30 June 2017.
1.2.2 Calculate the correct balances for the debtors listed in the ANSWER BOOK.
1.2.3 Refer to the Age Analysis (Information C):
- Calculate the percentage of debtors that are not complying with the 30 days credit terms.
- Explain TWO internal control measures that JT Traders can use to ensure that only reliable clients are granted credit.

INFORMATION:

A. Balances on 30 June 2017 (before errors and omissions):
Debtors Control balance R74 600
Debtors list
N. Pillai 70 000
Y. Bosman 21 600
C. Tele 12 400
A. Botha 24 900

B. Errors and omissions discovered:
(i) The Debtors Journal was overcast by R3 500.
(ii) An allowance of R800 granted to Pillai for damaged goods that matched was entered in the wrong side of the account.
(iii) Goods sold on credit to Botha for R6 300 was posted incorrectly to the account as R3 600. Posting to the General Ledger was correct.
(iv) A cheque for R2 500 received from Tele was recorded in the Debtors Journal of Bosman.
(v) A cheque for R230 received from Pillai was returned by the bank marked "R/D – insufficient funds". A discount of R30 was granted when this cheque was received. This has not yet been recorded.

1.3 CREDITORS RECONCILIATION
Marge Traders buys goods on credit from Simpson Suppliers. The information presented is for July 2017.

REQUIRED:
Reconcile the Creditors Ledger account of Simpson Suppliers in the books of Marge Traders with the statement received.

Commence with the opening balances as provided in the ANSWER BOOK.

A. Creditors Ledger of Marge Traders
Simpson Suppliers (CL6)

July 1 Balance 34 200
Invoice No. 443 3 370
Receipt No. 376 8 000
Cheque No. 2810 15 000 4 770
Discount 22 320
Invoice No. 568 7 740 5 640
Debit Note No. 114 20 000
Invoice No. 767 2 970

B. Statement received from Simpson Suppliers

SIMPSON SUPPLIERS
STATEMENT OF ACCOUNT
Customer: Marge Traders
112 Willow Street
Willowmore

Statement date: 25 July 2017

Account rendered 8 830
Invoice No. 376 3 370 8 000
Receipt No. 743 3 640 39 050
Invoice No. 443 7 740 91 940
Invoice No. 4328 1 620 94 940
Invoice No. 562 720 39 640
Credit Note No. 743 880 34 560
Invoice No. 772 on statement recorded

C. Differences noted:
(i) Invoice No. 443 was recorded incorrectly in the creditors ledger.
(ii) The statement did not reflect the discount for early payment on the 10th. This will be rectified on the next statement.
(iii) It was discovered that Invoice No. 568 on the statement included goods valued at R1 000 ordered by the warehouse manager. The manager is facing disciplinary action.
(iv) Goods valued at R800 were returned on the 18th. It is shown as a debit entry in both the creditor's ledger account as well as the statement.

(v) Invoice No. 772 on the statement for goods sold to a different creditor was included in the creditor's ledger.

1.1 Choose the correct answer from the words provided within brackets - NSC Accounting - Question 1 - 2017 - Paper 1

Worked Solution & Example Answer:1.1 Choose the correct answer from the words provided within brackets - NSC Accounting - Question 1 - 2017 - Paper 1

1.1.1 A stale cheque, one that is more than 6 months old, must be cancelled in the (Cash Receipts Journal/Cash Payments Journal).

1.1.2 A (debit/credit) balance on the bank statement indicates an overdraft.

1.1.3 A (debit note/credit note) is offered when accounts are settled within a certain time.

1.1.4 A (cash discount/trade discount) is offered when accounts are settled within a certain time.

1.2.1 Calculate the correct Debtors Control balance on 30 June 2017.

1.2.2 Calculate the correct balances for the debtors listed in the ANSWER BOOK.

1.2.3 Calculate the percentage of debtors that are not complying with the 30 days credit terms.

1.2.3 Explain TWO internal control measures that JT Traders can use to ensure that only reliable clients are granted credit.

1.3 Reconcile the Creditors Ledger account of Simpson Suppliers in the books of Marge Traders.

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