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 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 general ledger as R3 600. This is recorded on the General Ledger versus correct.
(iv) A cheque for R2 500 received from Tele was recorded in the account of Bosman instead.
(v) A cheque for R230 received from Pillai was returned by the bank marked ‘R/D – insufficient funds’. A accrual 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.

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

July 1  Balance                         35 000      34 200
  Invoice No. 443                       3 370    8 000
  Receipt No. 114                      15 000   4 770
  Cheque No. 201                      7 440     9 800
  Invoice No. 568                      5 640      20 000
  Debit Note No. 114                 985      27 880
  Invoice No. 267                     2 970     35 000
B. Statement received from Simpson Suppliers

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 R898 were returned on the 18th. It is shown as a debit entry in both the creditors’ account as well as in the Statement.
(v) Invoice No. 772 on the statement for goods sold to a different customer should have been allocated to another 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.

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 with the statement received.

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