1

Creditor’s Reconciliations

QUESTION 1: CREDITORS' RECONCILIATION

1.1 CREDITORS' RECONCILIATION

Ekasi Traders buys goods on credit from Thembeka Suppliers.

REQUIRED:

1.1.1 Use the table provided to indicate changes to the:

 Creditors' Ledger Account in the books of Ekasi Traders

 Creditors' Reconciliation Statement on 30 April 2021 (9)

1.1.2 Refer to Information C(c) about Invoice 395. It was discovered that the
purchasing manager, Bradley, had taken these goods for his personal
catering business. The owner regards Bradley as a valued member of
staff and does not regard this as theft.

What should the owner say to Bradley regarding this incident? Explain
TWO points. (4)

INFORMATION:

A. Creditors' Ledger Account in the books of Ekasi Traders

THEMBEKA SUPPLIERS (CL6)
DEBIT CREDIT BALANCE
2021 1 Balance b/d R81 000
April 12 Invoice 220 97 200 178 200
EFT 40 500 137 700
18 Debit Note 702 10 300 127 400
Invoice 289 49 100 176 500
Invoice 333 30 000 206 500
24 Debit Note 877 9 700 216 200
25 Journal voucher 585 6 400 209 800
31 EFT and discount 92 600 117 200

B. Statement of account from Thembeka Suppliers

Ekasi Traders
225 Crocodile Road 25 April 2021
DEBIT CREDIT BALANCE
2021 1 Balance R81 000
April 12 Invoice 220 97 200 178 200
Receipt 742 40 500 137 700
18 Credit Note 791 13 100 124 600
Invoice 333 30 000 154 600
22 Invoice 395 12 500 167 100
24 Credit Note 888 9 700 157 400

Copyright reserved Please turn over

 2
Creditor’s Reconciliations

C. Errors, omissions and other information:

(a) Invoice 289 was incorrectly reflected in the account of Thembeka
Suppliers in the Creditors' Ledger. These goods were purchased
from Thami Suppliers.
(b) Credit Note 791 was recorded incorrectly on the statement of
account. This relates to the correct entry for Debit Note 702 in the
Creditors' Ledger.
(c) Invoice 395 on the statement of account was for goods ordered by
Ekasi Traders.
(d) Thembeka Suppliers also purchased goods on credit from Ekasi
Traders. Ekasi Traders has transferred a debit balance from the
Debtors' Ledger (Journal voucher 585). Thembeka Suppliers will
include this on the next statement.
(e) The transaction on 24 April 2021 is for merchandise returned to
Thembeka Suppliers.
(f) The statement of account reflects transactions up to 25 April 2021.

QUESTION 2
2.1 CREDITORS' RECONCILIATION

Claire Traders buys goods on credit from Mariti Suppliers.

REQUIRED:

2.1.1 Use the table provided to indicate changes to the:

 Creditors' Ledger Account in the books of Claire Traders

 Creditors' Reconciliation Statement on 31 July 2018 (13)

2.1.2 The internal auditor insists that direct payments (EFTs) must be
used to pay suppliers. Explain:

 ONE reason to support his decision (2)

 ONE internal procedure to ensure control over this system (2)

2.1.3 Refer to Invoice 301. It was discovered that the store manager,
Vernon, had signed a fictitious order form and took the goods for
himself when they arrived. Besides dismissing Vernon, provide:

 ONE suggestion for action to be taken against him

 ONE suggestion to prevent this problem in future (4)

Copyright reserved Please turn over

 3
Creditor’s Reconciliations
INFORMATION:
A. Creditors' Ledger of Claire Traders
MARITI SUPPLIERS (CL5)
DEBIT CREDIT BALANCE
2018 1 Balance b/d 67 500
July 10 Invoice 209 81 000
EFT 33 750
17 Debit Note 674 8 640
Invoice 282 40 950
Invoice 301 25 000
21 Invoice 360 50 250
24 Debit Note 995 8 100
27 Journal Voucher 570 5 400
31 EFT and discount 77 190 147 820
B. Statement of account from Mariti Suppliers
MARITI SUPPLIERS
Claire Traders
25 July 2018
108 Kruger Road
DEBIT CREDIT BALANCE
2018 1 Balance 67 500
July 10 Invoice 209 81 000
Receipt 695 33 750
17 Credit Note 741 6 840
Invoice 301 25 000
21 Invoice 360 20 250
24 Credit Note 811 8 100 145 060

C. Differences noted:
(a) The incorrect entry for Debit Note 674 in the Creditor's Ledger
Account of Mariti Suppliers relates to the correct Credit Note 741
on the statement.
(b) Invoice 282 was incorrectly reflected in the account of Mariti
Suppliers in the Creditors' Ledger. The goods were purchased from
Genesis Suppliers.
(c) Invoice 360 was incorrectly recorded on the statement from Mariti
Suppliers.
(d) Mariti Suppliers also purchased goods on credit from Claire
Traders. Claire Traders has transferred a debit balance from the
Debtors' Ledger (Journal Voucher 570). Mariti Suppliers will offset
this on the next statement.
(e) The transaction on 24 July 2018 is for merchandise returned to
Mariti Suppliers.
(f) The statement reflects transactions up to 25 July 2018.

Copyright reserved Please turn over

 4
Creditor’s Reconciliations

QUESTION 3: CREDITORS' RECONCILIATION

KZ Stores purchase goods on credit from Valley Ltd.

REQUIRED:

3.1 The bookkeeper, Litzie, says it is not necessary for her to prepare a Creditors'
Reconciliation Statement because the creditors send monthly statements to
the business anyway. What would you say to her? State TWO points. (4)

3.2 Use the table in the ANSWER BOOK to indicate how the relevant balances
will change when preparing the creditors' reconciliation. Indicate the figure as
well as a + for increase and a – for decrease. The first transaction
(Information A) has been done for you. (16)

INFORMATION:

The following balances are provided:

In the account of Valley Ltd in the Creditors'

R112 820 Credit
Ledger of KZ Stores on 30 September 2014:
On the statement received from Valley Ltd on
R182 150 Debit
25 September 2014:

The following errors and omissions were discovered during an investigation:

A. A payment by KZ Stores of R9 000 was omitted from the Creditors'

Ledger and the statement.

B. An invoice for goods bought for R87 500 was reflected on the statement
from Valley Ltd but was not recorded by KZ Stores.

C. An invoice for R28 000 received from Valley Ltd was recorded correctly
by KZ Stores. The statement of account reflects it as R20 800.

D. KZ Stores had correctly recorded discount of R1 400 for early payment

of their account. This has not been reflected on the statement from
Valley Ltd.

E. The statement reflects interest of R630 on the overdue account.

Valley Ltd acknowledged that an error had been made and promised to
reverse the entry in the October 2014 statement.

F. A debit note for R2 100 issued to Value CC was incorrectly recorded in

the account of Valley Ltd by KZ Stores.

G. A credit note for R5 250 received from Valley Ltd for goods returned was
incorrectly recorded as an invoice by KZ Stores.

H. Goods purchased from Valley Ltd on 30 September 2014 for R4 600

were recorded by KZ Stores. The statement from Valley Ltd is dated
25 September 2014.

Copyright reserved Please turn over

 5
Creditor’s Reconciliations

3.3 Refer to Information B:

As the internal auditor of KZ Stores, you have detected that only R50 000 of
these goods were entered into the stock records by the storeman. The
remaining goods were ordered privately by J van Wyk, an employee in charge
of creditors.

3.3.1 Explain what action should be taken against J van Wyk. State TWO
points. (4)

3.3.2 What must the business do to prevent a similar incident in future?

Explain THREE points. (6)

QUESTION 4: CREDITORS' RECONCILIATION

4.1 Thanda Stores buys goods on credit from Minty Suppliers.

REQUIRED:

4.1.1 Use the table provided to indicate the changes that must be made:
 In the Creditors' Ledger Account in the books of Thanda Stores
 In the Creditors' Reconciliation Statement on 29 February 2016 (14)

4.1.2 An investigation into the transaction on 2 February 2016 for Invoice 560
revealed that Pearl Fakude (purchasing manager) ordered goods for
herself. These goods were not taken into stock.

State TWO internal control measures that the business can use to
prevent similar incidents from happening in future. (4)

INFORMATION:

A. Creditors' Ledger of Thanda Stores

Minty Suppliers
DATE DETAILS FOL. DEBIT CREDIT BALANCE
Feb. 01 Balance b/d 52 200
02 Invoice 560 CJ 44 200 96 400
04 Debit Note 52 CAJ 2 700 93 700
07 EFT 443 CPJ 31 350 62 350
Discount received CPJ 3 300 59 050
20 Invoice 996 CJ 11 100 70 150
23 EFT 575 CPJ 13 200 56 950
24 Invoice 590 CJ 24 000 80 950
28 EFT 580 CPJ 13 800 67 150
Discount received CPJ 1 380 65 770
29 Invoice 592 CJ 44 400 110 170

Copyright reserved Please turn over

 6
Creditor’s Reconciliations
B. Statement of account received from Minty Suppliers
MINTY SUPPLIERS No. 2169
205 Kingsview Road
Durban 3201

Debtor: Thanda Stores 25 February 2016

DATE DETAILS DEBIT CREDIT BALANCE
Jan. 25 Balance 67 200
28 Receipt 110 15 000 52 200
Feb. 02 Invoice 560 49 200 101 400
04 Credit Note 09 2 700 104 100
07 Receipt 122 31 350 72 750
Discount allowed 1 650 71 100
18 Invoice 571 28 800 99 900
23 Receipt 138 13 200 86 700
24 Invoice 590 21 600 108 300
25 Delivery charges 3 300 111 600

C. An investigation revealed the following errors and omissions:

(a) Invoice 996 was for goods that Thanda Stores bought from
another supplier, Mondi Suppliers.

(b) Invoice 560 was recorded correctly on the statement of account.

(c) Invoice 571 was an error on the statement. This was for goods
supplied to another business.

(d) The discount allowed on 7 February 2016 is correct as per the

statement of account.

(e) Thanda Stores omitted to deduct the trade discount allowed on

Invoice 590.

(f) Goods for R2 700 were returned by Thanda Stores to Minty

Suppliers on 4 February 2016.

(g) In terms of the contract Minty Suppliers charges a delivery fee to

all its customers.

(h) The statement of account only includes transactions up to

25 February 2016.

Copyright reserved Please turn over

 7
Creditor’s Reconciliations

QUESTION5: CREDITORS' RECONCILIATION

5.1 Comet Traders received a statement of account from a creditor, Meteor

Suppliers.The balance on the statement did not agree with that on the
account of Meteor Suppliers in the Creditors'Ledger of Comet Traders.

REQUIRED:

5.1.1 Complete the table in the ANSWER BOOK to show how the differences must
be treated to reconcile the Creditors'Ledger Account balance with the
statement balance.

Write the amounts in the appropriate columns and indicate the increase or
decrease with a (+) or (-) with each amount.

Total the columns to show the correct balances at the end of March 2015. (9)

INFORMATION:

Balance of Meteor Suppliers in Creditors' Ledger of Comet Traders R10 705

Balance on the statement received from Meteor Suppliers R19 120

A comparison between the Creditors' Ledger Account of Meteor Suppliers

and the statement of account showed the following differences:

A. An invoice for R9 870 received from Meteor Suppliers was correctly

recorded in the Creditors Ledger Account. The amount was incorrectly
recorded as R8 790 on the statement.

B. Comet Traders entered a discount of R375 relating to a payment of

R5 000 on 15 March 2015. Meteor Suppliers did not approve this
discount stating that the payment was received late.

C. The statement of account reflected returns valued at R890. The

Creditors' Ledger Account showed R690. It was established that Comet
Traders miscalculated the value of the goods returned.

D. An invoice for R2 160 received from Meteor Suppliers was incorrectly

recorded as a debit note in the Creditors' Ledger.

E. A direct transfer of R5 000 by Comet Traders was recorded in the Cash

Payments Journal on 29 March 2015. The statement of account from
Meteor Suppliers was dated 25 March 2015.

Copyright reserved Please turn over

 8
Creditor’s Reconciliations

QUESTION 6: CREDITORS CONTROL ACCOUNT AND THE CREDITORS LIST

The bookkeeper of Micah Roos Stores made some mistakes and omitted certain
transactions in preparing the Creditors’ Control Account and the Creditors’ List on
30 June 2014. You are the internal auditor of the store.

REQUIRED:

6.1 List the corrections that the bookkeeper must make to the Creditors'
Control Account in the General Ledger. If no entry is applicable, write 'NO
ENTRY'. (8)

6.2 Prepare the correct Creditors’ List on 30 June 2014. (10)

INFORMATION

Pre-adjustment figures on 30 June 2014

Creditors’ Control Account balance R160 300

Creditors’ List total from the Creditors’ Ledger R170 400 R170 400
 Fourie Traders R29 600
 Faure Wholesalers R96 500
 Hlabiks Stores R44 300

ERRORS AND OMISSIONS

A The total of the Creditors Allowance Journal was undercast by R13 000.

B The total of Creditors Journal was inaccurately added as R52 250 instead of
R62 350.

C A payment of R43 000 to Hlabiks Stores was correctly recorded in the Cash
Payments Journal but the bookkeeper neglected to post this payment to the
creditor’s account.

D A EFT for R2 100 issued to Fourie Traders in settlement of their debt of

R2 300 was correctly recorded in the Cash Payments Journal but
inadvertently posted to Faure Wholesalers account. Rectify the error.

E A credit balance of R470 from Hlabiks Stores’ account in the Debtors

Ledger must be transferred to their account in the Creditors Ledger.

F Credit purchases of merchandise to the value of R38 600 from Faure

Wholesalers were wrongly entered as R83 600 in the Creditors Journal and
posted as such.

G Fourie Traders’ account was mistakenly debited with credit purchases of

merchandise to the value of R15 000.

Copyright reserved Please turn over

 9
Creditor’s Reconciliations

QUESTION 7: CREDITORS’ RECONCILIATION

The Creditors’ Control account and the Creditors’ List were prepared by the
bookkeeper on 30 April 2014, but you noted a few areas and omissions.

REQUIRED:

7.1 List the corrections that the bookkeeper must make to the
Creditors’Control account in the General Ledger by showing the
amounts with a ‘+’ for an increase or a ‘-’ for a decrease. Place an ‘x’ in
the No entry column if there is no change. (10)

Creditors’ Control
Adjustment No entry
Balance 58 270

7.2 Prepare the correct Creditors’ List on 30 April 2014. (11)

INFORMATION:
1. The Creditors’ Control account reflected a balance of R58 270 on
30 April 2014.
2. The list of creditors on 30 April 2014 was as follows:

Debit Credit
Mango Traders 8 465
Serengeti Stores 5 123
Post Network 12 874
Serengeti Wholesalers 14 869
Riviria Distributors 21 119
62 450

AND OMISSIONS
1. The balance of Mango Traders’ account was calculated incorrectly. It
should be R8 965.
2. A credit invoice for R3 820 for trading stock purchased from
Serengeti Stores was incorrectly posted to the account of Serengeti
Wholesalers.
3. A payment of R7 200 made to Post Network was recorded as R2 700
in the CPJ and posted as such.
4. A credit invoice for stationery purchased from Mango Traders for
R825 was not recorded at all.
5. The CAJ total was overstated by R480.
6. Goods costing R2 100 returned to Riviria Distributors was recorded
correctly in the relevant journal. It was however posted to Riviria
Distributors’ account as a credit purchase.
Copyright reserved Please turn over
 10
Creditor’s Reconciliations

QUESTION 8: CREDITORS' RECONCILIATION

8.1 The Creditors' Control account and the Creditors' List for
September 2014 were prepared by the bookkeeper, but there were
some errors and omissions.

The incorrect balance in the Creditors' list on 30 September 2014 is

R37 415 and the balance in the Creditors' control account is
R31 105.

REQUIRED:

Indicate the corrections that must be made to the Creditor's Control

account in the General Ledger and Creditors' List by showing the
amounts with:

+ for increase; - for decrease. (12)

Errors and omissions:

1 The Creditors Journal was overcast by R500.

2 A debit note of R700 was not entered in the Creditors

Allowance Journal at all.

3 A debtor with a credit balance of R1 500 was included in the list

of creditors by mistake.

4 An amount of R3090 in the Creditors Journal was incorrectly

posted to a creditor’s account as R3900

5 The Debtors' Control column of R4 500 and the Cash Payment

Journal was erroneously posted to the Creditor’s Control
account.

6 Transfer the credit balance of R1 000 of a debtor in the Debtors'

Ledger to his account in the Creditors' Ledger

Copyright reserved Please turn over

 11
Creditor’s Reconciliations

QUESTION 9: CREDITORS RECONCILIATION

Port Traders buys goods on credit from Salt Suppliers.

REQUIRED:

9.1 Show the changes to the Creditors Ledger account balance and the Statement
balance for each of the differences balance. Use the table provided in the
ANSWER BOOK.listed below. Indicate whether the amount must be added (+) or
subtracted (-) to the given (12)

9.2 Refer to information vi):

An investigation revealed that these goods were ordered by the owner for
his personal use. As an internal auditor, what advice would you offer the
owner regarding the purchase of goods through the business accounts?
Make reference to a GAAP principle in your explanation. (3)

INFORMATION:

A. Balance due to Salt Suppliers on 30 June 2016 as per

87 320 (Cr)
Creditors Ledger account in the books of Port Traders.
Balance due by Port Traders on 26 June 2016 as per the
95 400 (Dr)
statement of account received from Salt Suppliers.
B. Differences noted:

(i) A payment of R6 500 by Port Traders was omitted in the Creditors

Ledger Account of Salt Suppliers and on the Statement received.

(ii) An invoice for R14 300 received from Salt Suppliers was recorded
correctly by Port Traders. The statement of account reflected R13 400.

(iii) Port Traders correctly recorded a discount of R800 for early payment. This
was not shown on the statement.

(iv) Port Traders recorded a debit note for R1 250 in the creditors’ ledger
account of Salt Suppliers in error. This was for goods returned to another
supplier.

(v) A credit note for R2 000 received from Salt Suppliers for an allowance
granted, was incorrectly recorded as an invoice by Port Traders.

(vi) The statement of account showed the following items that were not
recorded by Port Traders :
 Delivery charges for the month, R3 530. 
 Invoice for goods purchased, R2 400. 

(vii) A payment of R5 000 made on 28 June 2016 by Port Traders was

recorded in the Creditors Ledger account of Salt Suppliers. The
statement was dated 26 June 2016.

Copyright reserved Please turn over

 12
Creditor’s Reconciliations

QUESTION 10: CREDITORS RECONCILIATION

The Creditors’ Control account and Creditors’ List of Titanic Traders were prepared
by an inexperienced bookkeeper. He identified the following figures at the end of the
month:

 Creditors’ control balance, R74 715

 Creditors list total, R32 595
REQUIRED:
10.2.1 Briefly explain how the preparation of a creditors’ reconciliation as an
internal control measure can assist the business in managing their creditors
effectively. Provide TWO points. (4)
10.2.2 Use the table provided to indicate the changes that must be made in the
Creditors’ Control account and Creditors’ List to take into account the errors
and omissions noted. Indicate the increase or decrease with a (+) or (-) with
each amount. (9)
10.2.3 Refer to information B.
An investigation into the transaction relating to the credit purchase from
Micro Ltd revealed that Vusi Ngomane (purchasing manager) ordered goods
for himself. These goods were not taken into stock.
State THREE internal control measures that the business can use to prevent
similar incidents from happening in future. (6)

INFORMATION:
Errors and omissions noted:
A. The total of the Creditors’ List was undercast by R900.
B. A credit purchase from Micro Ltd for R3 720 was not recorded in the books
of the business.
C. Trading stock returned to Omega Ltd, R720, was entered correctly in the
Creditors Allowances Journal (CAJ), but was posted as R270 to the
Creditors’ account of Omega Ltd.
D. The Creditors Control total in the Cash Payments Journal is R16 400. The
bookkeeper credited this to the Creditors Control account by mistake.
E. An invoice for R8 870 for stock purchased from Mini Market on account has
been correctly recorded in the Creditors Journal, but has not been posted
to their account in the Creditors ledger.

Copyright reserved Please turn over

 13
Creditor’s Reconciliations

QUESTION 11: RECONCILIATION

Ladoo Traders buys goods on credit from Anami Suppliers. The information relates to
August 2018.

REQUIRED:

11.1 Use the table in the ANSWER BOOK to indicate how the balances will
change when preparing the creditors reconciliation. Indicate the figure as
well as a + for increase and a – for decrease. (11)
11.2 Refer to Information (vi):
An investigation revealed that only R21 500 of these goods were entered in
the stock records. The remaining goods were ordered by M. Rice, the credit
manager.
 Provide TWO possible actions that can be taken against M. Rice. (4)
 Explain TWO internal control measures that the business can use to
prevent such incidents in future. (4)
INFORMATION:
A. Balances:
Account of Anami Suppliers in the Creditors Ledger of
R95 160 Cr
Ladoo Traders on 31 August 2018
Statement from Anami Suppliers on 25 August 2018 R143 460 Dr

B. Errors and omissions discovered during an investigation:

(i) An invoice for R26 000 received from Anami Suppliers was recorded
correctly by Ladoo Traders. The statement reflects it as R20 600.
(ii) Ladoo Traders had correctly recorded a discount of R820 for an
early payment. This did not appear on the statement from Anami
Suppliers.
(iii) The statement reflected interest of R1 240 on an overdue balance.
Anami Suppliers acknowledged that an error had been made.
(iv) A debit note for R1 520 issued to Amanda Ltd was incorrectly
recorded in the account of Anami Suppliers by Ladoo Traders.
(v) A credit note for R2 440 received from Anami Suppliers for goods
returned was incorrectly recorded as an invoice by Ladoo Traders.
(vi) An invoice for R47 500 was reflected on the statement from Anami
Suppliers but was not recorded by Ladoo Traders.
(vii) A payment of R7 500 by Ladoo Traders on 27 August 2018 was
recorded in the Creditors Ledger account of Anami Suppliers.

Copyright reserved Please turn over

 14
Creditor’s Reconciliations

QUESTION 12: RECONCILIATIONS

MZN Traders buys goods on credit from Styles Suppliers.

REQUIRED:
12.1 Use the table in the ANSWER BOOK to indicate how the balances
given, will change when preparing the creditors' reconciliation.
Indicate the figure as well as a + for increase and a – for
decrease. (14)

INFORMATION:

Balance due to Styles Suppliers on 31 July 2018 as per

12 160 (Cr)
Creditors’ Ledger account in the books of MZN Traders
Balance due by MZN Traders on 28 July 2018 as per
41 380 (Dr)
statement of account received from Styles Suppliers

ERRORS AND OMISSIONS:

A A payment of R8 700 by MZN Traders was not recorded in the

Creditors' ledger account and appear not on the statement as well.

B A discount of R950 for early payment was correctly recorded by

MZN Traders. This was not reflected on the statement.

C MZN Traders recorded a debit note of R1 540 in the Creditors’

ledger account of Styles Suppliers in error. This was for goods
returned to another supplier.

D An invoice for R28 600 received from Styles Suppliers was

recorded correctly in the Creditors’ Ledger account. The statement
of account reflected this invoice as R26 800.

E The statement of account showed an invoice for goods purchased,

R5 930. This transaction was not recorded in the books of MZN
Traders.

F An invoice of R4 700 was incorrectly recorded as a payment by

MZN Traders.

G A debit balance of R2 925 for repairs to a photocopier was

transferred from the account of Styles Suppliers in the Debtors
Ledger to their account in the Creditors Ledger. This transaction
was not recorded by Styles Suppliers.

H A payment of R10 275 made on the 29 July 2018 by MZN Traders

was not reflected in the statement.

Copyright reserved Please turn over

 15
Creditor’s Reconciliations
12.2 Refer to information E:
An investigation revealed that this invoice was not recorded as the
goods were taken by the store man, A Skelm for his private use.

(a) Suggest TWO possible actions that the business can take
against the store man. (4)

(b) Provide THREE internal control measures that the business

can use to prevent similar incidents in future. (6)

13 CREDITORS’ RECONCILIATION
Karoo Traders buys goods on credit from DM Suppliers. The business received
a statement for June 2018 from the creditor.
REQUIRED:
13.1 Calculate the correct balance of DM Suppliers in the Creditors' Ledger of
Karoo Traders. Show the changes to the figure R47 064. (8)
13.2 Prepare a Creditors' Reconciliation Statement for DM Suppliers on
30 June 2018. (7)
13.3 Explain TWO benefits of using electronic funds transfer (EFT) system
rather than using EFTs for direct payments to creditors. (4)
13.4 State TWO consequences for the business if they do not pay the amount
due to creditors on time. (4)

INFORMATION:
A. Creditors’ Ledger of Karoo Traders
DM SUPPLIERS (CL7)
Date Debit Credit Balance
2018 01 Account rendered 35 920
June 05 Invoice 346 11 808 47 728
07 Debit note 69 816 46 912
13 EFT 207 22 788 24 124
Discount 3 532 20 592
14 Invoice 135 6 929 27 521
16 EFT- 675 1 000 26 521
23 Invoice 378 7 188 33 709
24 Invoice 396 8 829 42 538
30 Invoice 407 4 526 47 064

Copyright reserved Please turn over

 16
Creditor’s Reconciliations
B. Statement of account received on 30 June 2018:
DM SUPPLIERS
PO Box 2245, Kaapsehoop 2201 Tel: 013 759 9902
Karoo Traders Date: 25 June 2018
50 Main Road Credit limit :R90 000
Emalahleni 1035 Payment terms: 60 days
DATE DETAILS DEBIT CREDIT BALANCE
2018 01 Balance 35 920
June 05 Invoice 346 10 296 46 216
07 Credit Note 109 816 47 032
13 Receipt 5140 22 788 24 244
16 EFT-675 1 000 23 244
23 Invoice 378 7 188 30 432
24 Invoice 396 9 810 40 242
25 Interest 29 40 271
C. Additional Information:
1. Invoice 346 on 5 June 2018 was correct according to the statement.
2. DM Suppliers made an error when recording goods returned on
7 June 2018.
3. Karoo Traders qualified for discount with the payment on 13 June
2018. DM Suppliers granted only R2 532 as discount. They will show
this on their statement next month.
4. Invoice 135 for R6 929 was recorded incorrectly in the Creditors'
Ledger Account of DM Suppliers. This purchase was from Panday
Suppliers.
5. A trade discount of 10% was deducted on Invoice 396. DM Suppliers
did not take this into account. This will be rectified on the next
statement.
6. The statement shows transactions up to 25 June 2018.

Copyright reserved Please turn over

 17
Creditor’s Reconciliations

QUESTION 14: CREDITOR'S RECONCILIATIONS

14.1 CREDITORS’ RECONCILIATION:

Broad Stores purchase goods on credit from Ashes Ltd.
REQUIRED:

Use the table in the ANSWER BOOK to indicate how the relevant balances
will change when preparing the creditors' reconciliation. Indicate the figure as
well as (+) for increase and (–) for decrease. The first transaction has been
done for you. (18)
INFORMATION:
The following balances are provided

In the account of Ashes Ltd in the

Creditors' Ledger of Broad Stores on R114 485 Credit
31 August 2018:
On the statement received from Ashes Ltd on
R182 150 Debit
25 August 2018:

The following errors and omissions were discovered during an investigation:

A. A payment by Broad Stores of R9 500 was omitted from the
Creditors' Ledger and the statement of accounts.
B. An invoice for goods bought for R87 000 was reflected on the
statement from Ashes Ltd but was not recorded by Broad Stores.
C. An invoice for R28 000 received from Ashes Ltd was recorded correctly
by Broad Stores. The statement of account reflects it as R21 100.
D. Broad Stores had correctly recorded discount of R1 350 for early
payment of their account. This has not been reflected on the statement
from Ashes Ltd.
E. The statement of accounts reflects interest of R730 on the overdue
account. Ashes Ltd acknowledged that an error had been made and
promised to reverse the entry in the September 2018 statement.
F. A debit note for R2 000 issued to Value CC was incorrectly recorded in
the account of Ashes Ltd by Broad Stores.
G. A credit note for R5 350 received from Ashes Ltd for goods returned
was incorrectly recorded as an invoice by Broad Stores.
H. Ashes Ltd included returns of R1 215 on the statement. This was
returns by another client, Road Stores.
I. Goods purchased from Ashes Ltd on 31 August 2018 for R4 600 were
recorded by Broad Stores. The statement of accounts from Ashes Ltd is
dated 25 August 2018.

Copyright reserved Please turn over

 18
Creditor’s Reconciliations

QUESTION 15: CREDITORS RECONCILIATION

Information below relates to Busby Stores for September 2018.

REQUIRED:

15.3.1 Provide TWO reasons why it is important for the business to prepare
the Creditors' Reconciliation Statement each month. (4)

15.3.2 Calculate the correct Creditors' Control Account balance after taking
into account the relevant errors and omissions. (6)

15.3.3 Calculate the correct balances for creditors Zebo Suppliers and Leo
Wholesalers, by taking into account the errors and omissions. (10)
INFORMATION

A Balance and totals on 30 September 2018 (before errors and omissions).

Creditors control account in the General Ledger R87 690

Creditor's list: (before errors and omissions)
Zebo Suppliers R16 580
Leo Wholesalers R29 520

B ERRORS AND OMISSIONS

(a) The Creditors control was under-cast by R5 020.

(b) A credit invoice for trading stock purchased from Zebo Suppliers for
R12 800 on 28 September 2018 was not recorded at all.

(c) A payment of R3 150 to Leo Wholesalers was posted as an invoice in

the Creditors' ledger. The CPJ was correct.

(d) A debit note of R1 280 for goods returned to Zebo Suppliers was
recorded in the Creditors' Journal in error and posted to the General
Ledger accordingly. Posting to the Creditors' ledger was correctly
done from the document.

(e) VAT of R1 720 was omitted from an invoice from Zebo Suppliers.

(f) Equipment purchased on credit from Blackwood Manufacturers,

R4 900, was incorrectly posted to the account of Leo Wholesalers.

(g) An invoice for R3 575 from Zebo Suppliers was incorrectly posted as
R3 375 to their account in the Creditors' Ledger only.

Copyright reserved Please turn over

 19
Creditor’s Reconciliations

QUESTION 16: CREDITORS RECONCILIATION

Dolphins Diving Equipment has had a large turnover of staff in the accounting
department which resulted in both the Creditors’ Control and the Creditors List being
prepared by inexperienced bookkeepers. You have been asked to assist.
16.1 What is the purpose of reconciling the balance on the Creditors’ control
account with the total of the Creditors’ List from the Creditors’ Ledger?
State TWO points. (4)
16.2 Calculate the correct balance of the Creditors’ Control account and the
correct total of Creditors’ List. Preliminary balance for Creditors’ Control
Account is R74 715 and total for Creditors’ List is R32 595. (12)

An investigation revealed the following errors and omissions.

A. The total of the Creditors’ List was undercast by R900

B. A credit purchase from Micro Ltd for R3 720 was not entered in any
journal.
C. Trading stock returned to Epress Ltd, R720, was entered correctly in
the CAJ, but posted to the creditor’s account as R270
D. The bookkeeper posted the total of the Creditors Control column in
the CPJ, R16 400 to the credit side of the Creditors’ Control account.
E. Makro & Co charged Dolphins Diving Equipment R43 interest for not
paying their account on time. The bookkeeper did not know how to
enter it.
F. An invoice for R8 870 for stock purchased from Mini Market on
account has been correctly recorded in the CJ, but has not been
posted to their account.

Copyright reserved Please turn over