(a) Outline three reasons for keeping control accounts. 

(b) The following information was extracted from the books of William Noel for the year ended 30 April 2001.

Draw up the Purchase Ledger Control account for the year ended 30 April 2001. 

The total of the balances in William Noel's purchase ledger amounts to $67 660, which does not agree with the closing balance in the Control account. 

The following errors were then discovered. 

1. Discount received had been overstated by $1000. 

2. A credit purchases invoice for $2040 had been completely omitted from the books. 

3. A purchases ledger account had been understated by $100. 

4. A credit balance of $850 in the purchases ledger had been set off against a contra entry in the sales ledger, but no entry had been made in either Control account. 

5. A payment of $1450 had been debited to the creditor's account but was omitted from the bank account.

6. A credit balance of $3210 had been omitted from the list of creditors. 

(c) 

(i) Extract the necessary information from the above list and draw up an amended Purchase Ledger Control account for the year ended 30 April 2001. 

(ii) Beginning with the given total of $67 660, show the changes to be made in the Purchase Ledger to reconcile it with the new Control account balance. 

(UCLES, 2001, AS/A Level Accounting, Syllabus 8706/2, October/November)

Transcribed Image Text:

Purchase Ledger Balance at 1 May 2000 Credit purchases for the year Credit purchases returns Cheques paid to creditors Cash purchases Discount received on credit purchases Credit balances transferred to sales ledger accounts 43 120 824 140 12 400 745 980 8 940 31 400 5210