supplementary question

SUPPLEMENTARY QUESTION You are the audit senior in charge of the audit of Black Lid, and you are auditing the company's trade creditors at 30 Tune 2009. A junior member of the audit team has been checking suppliers' statements against the balances in the purchases ledger. He is unable to reconcile a material balance relating to White Lid, and has asked for your help and suggestions on the audit work that should be carried out on the differences. The balance of White Lid in Black's purchases ledger is shown below: Supplier: White Lid Date Type Reference Status Dr Cr Balance 10.4 Invoice 6004 Paid 1 2130 18.4 Invoice 6042 Paid 1 1525 23.4 Invoice 6057 Paid 1 2634 4.5 Invoice 6080 5 Paid 2 3572 15.5 Invoice 6107- Paid 2 1632 26.5 Invoice 6154 Paid 2 924 31.5 Payment Cheque Alloc. 1 6163* Discount Alloc. 1 126 14.6 Invoice 6285 2156 21.6 Invoice 6328 3824 30.6 Payment Cheque Alloc. 2 6005 Discount Alloc. 2 123 30.6 Balance 5980 2 Below are the details on White's suppliers' statement. Customer: Black Led Date Type Reference Status Dr Cr Balance 7.4 Invoice 6004 Paid 1 2130 16.4 Invoice 6042 Paid 1 1525 22.4 Invoice 6057/ Paid 1 2634 2.5 Invoice 6080 Paid 2 3752 13.5 Invoice 6107 Paid 2 1632 22.5 Invoice 6154 Paid 2 924 . 10.6 Receipt Cheque Alloc. 1 6163 4.6 Invoice 6210 Alloc. 1 4735 12.6 Invoice 6285 2156 18.6 Invoice 6328 Alloc. 2 3824 28.6 Invoice 6355 Alloc. 2 6298 30.6 Balance 23 447 White's terms of trade with Black allow a 2% cash discount on invoices where White receives a cheque from the customer by the end of the month following the date of the invoice (i.e. a 2% discount will be given on May invoices paid by 30 June). On Black's purchase ledger, under 'Status', the cash and discount marked 'Alloc. I' pay invoices marked 'Paid I' (similarly for 'Alloc. 2" and 'Paid 2"). Black's receiving department checks the goods when they arrive and issues a receiving report. A copy of the report is sent to the purchases accounting department. Required a) Prepare a statement reconciling the balance on Black's purchases ledger to the balance on White's supplier's statement. b) Describe the audit work you will carry out on each of the reconciling items you have determined in your answer to (a) to determine the balance that should be included in the financial statements