Question

Question 3 [16]

You are the internal auditor of PB Gifts, a gift shop owned by Pat Bolt. The Creditors’ Control Account and Creditors’ List were prepared by the bookkeeper, Linda Lemmings. The postings from the journals have been done, but you have noted a number of errors and omissions.

CREDITORS’ LIST ON 31 JULY 2019

	DEBIT	CREDIT
Khan Traders	R563
Thankful Stores		R30 560
Connel Ltd		R10 890
Yolisa Wholesalers		R18 500
TOTALS	R563	R59 950

Errors and omissions:

1. A credit invoice for trading stock purchased from Connel Ltd for R3 400 on 28 July 2019 was not recorded at all.
2. Stock purchased on credit from Connel Ltd, R7 200, was incorrectly posted to the account of Yolisa Wholesalers.
3. Interest of R258 charged by Connel Ltd was omitted.
4. The debit balance of Khan Traders must be transferred to their account in the Debtors’ Ledger.
5. Goods of R8 350 returned to Thankful Stores were incorrectly treated as a credit purchase and posted accordingly.
6. A discount of R230 received from Yolisa Wholesalers was incorrectly posted to the Creditors’ Ledger as R320. The General Ledger is correct.
7. An amount of R80 in the Creditors’ Allowances Journal for trading stock returned was posted to the wrong side of a creditor’s account, Thankful Stores.
8. VAT of R490 was omitted from an invoice of equipment bought from Yolisa Wholesalers.

Required:

Prepare a correct Creditors’ list on 31 July 2019. Show workings in brackets. Complete the answers in the exact format below.

CREDITORS’ LIST ON 31 JULY 2019

	Debit	Credit
Khan Traders
Thankful Stores
Connel Ltd
Yolisa Wholesalers

Answer 1

The corrected creditors' list as on 31 July 2019 is as follows and same are derived from closing balances of creditors ledgers below:

CREDITORS’ LIST ON 31 JULY 2019
Creditor Name	Debit	Credit
Khan Traders	0	0
Thankful Stores	0	R 22,130
Connel Ltd	0	R 14,948
Yolisa Wholesalers	0	R 11,880
TOTALS	0	R 48,958

Note: Detailed working for above given corrected creditors' list as on 31 July 2019 is provided below:

Journal Entries In the books of PB Gifts              
              
1)   Connel Ltd A/c   Dr.   3,400  
   To Purchases A/c           3,400
   [Being goods purchased on 28.07.2019 returned to the supplier Connel Ltd]          
              
2)   Yolisa Wholesalers   Dr.   7,200  
   To Connel Ltd A/c           7,200
   [Being rectification entry for stock purchased from Connel Ltd but wrongly accounted in Yolisa Wholesalers books]          
              
3)   Interest A/c   Dr.   258  
   To Connel Ltd A/c           258
   [Being interest charged on us by Connel Ltd]          
              
4)   Khan Traders A/c   Dr.   563  
   To Khan Traders A/c           563
   [Being debit balance lying in Khan Traders credtiors A/c transferred to Khan Traders debtors A/c]          
              
5)   Thankful Stores A/c   Dr.   8,350  
   To Purchases A/c           8,350
   [Being goods purchased return to the supplier Thankful Stores]          
              
6)   Discount A/c   Dr.   90  
   To Yolisa Wholesalers           90
   [Being rectification of wrongy posted excess discount received by R90 i.e. R320 - R230]          
              
7)   Thankful Stores A/c   Dr.   80  
   To Creditors Allowances A/c           80
   [Being rectification of wrongly accounted purchase returns as creditors allowances and posted to wrong side of supplier Thankful Stores A/c]

          
8)   VAT A/c   Dr.   490  
   To Yolisa Wholesalers           490
   [Being entry posting for omitted VAT earlier on an equipment purchased from Yolisa Wholesalers]          

Ledger Entries In the books of PB Gifts

Khan Traders
Particulars	Amount (in R)	Particulars	Amount (in R)
To Opening Balance	563	By Khan Traders A/c	563
TOTALS	563		563

Thankful Stores
Particulars	Amount (in R)	Particulars	Amount (in R)
To Purchases A/c	8,350	By Opening balance	30,560
To Creditors Allowances A/c	80
To Closing Balance b/f	22,130
TOTALS	30,560		30,560

Connel Ltd
Particulars	Amount (in R)	Particulars	Amount (in R)
To Purchases A/c	3,400	By Opening balance	10,890
To Closing Balance b/f	14,948	By Yolisa Wholesalers A/c	7,200
		By Interest A/c	258
TOTALS	18,348		18,348

Yolisa Wholesalers
Particulars	Amount (in R)	Particulars	Amount (in R)
To Connel Ltd A/c	7,200	By Opening balance	18,500
To Closing Balance b/f	11,880	By Discount A/c	90
		By VAT A/c	490
TOTALS	19,080		19,080