Question:
Andrew Hegel manufactures garments in his Malagasy Factory. In an effort to remain competitive he continually switches between suppliers.. This has resulted in extra work for the Purchases ledger clerk who has to use a control account in order to keep control of the purchases ledger. At the end of July 20X1, the balance on the purchases ledger control account was $32,190. However, the total amount of creditors according to the purchases ledger was $32,040. The ledger clerk was instructed to carry out a check on the book keeping and, as a result, the following five errors were discovered:
- Error 1 The purchases day book was undercast by $1,000.
- Error 2 A contra entry for $650 with the sales ledger had been recorded twice in the control account.
- Error 3 Credit balances of $1,800 had been omitted from the list of creditor balances from the purchases ledger.
- Error 4 Andrew Hegel had recorded returns outwards for $2,000 but the supplier then refused to accept the goods which were sent back to him. This had gone unrecorded.
- Error 5 A return to M. Osman for $3,600 was made but not recorded at all in the ledger.
(a) Analyse the errors and decide how they should be corrected.
(b) Produce an adjusted purchases ledger account for Andrew Hegel.
(c) Determine and show the revised creditors balance for Andrew Hegel.