Reconciliations Questions and Answers | Accounting Grade 12

Worked example 1
Example adapted from March 2012 NSC question paper.
Crystal Traders sells glassware for cash and on credit.
Required
Study the information provided and answer the questions that follow.

1. Calculate the correct closing balance of the debtors’ control account on 31 March 2011. [5]
2. Calculate the correct amounts owing by the following debtors of Crystal Traders:
   1. R Jansen
   2. S Wonder
   3. P Collins [12]

Information

1. Balance of debtors’ control account on 31 March 2011 is R200 000
   (Can you see that the Debtors’ control account and the Debtors’ Ledger are not the same?)
2. Balances per Debtors’ Ledger on 31 March 2011:
   

   M Carey	R64 500
   R Jansen	R41 200
   S Wonder	R23 000
   C Dion	R51 500
   P Collins	R7 900
   TOTAL	R188 100

3. The following errors and omissions were discovered and must be corrected:
   1. The debtors’ journal has been overcast by R2 600.
      (Overcast means that the journal has been added up incorrectly and the amount is too big.
      Undercast means that the journal has been added up incorrectly and the amount is too small.)
   2. An invoice issued to S Wonder for R1 800 had not yet been recorded in the books of Crystal Traders.
   3. Stock sold on credit to P Collins was incorrectly charged to the account of R Jansen, R8 300.
   4. An invoice issued to P Collins for R6 000 had been posted to the wrong side of his account.
   5. A cheque of R13 500, originally received from R Jansen in settlement of an invoice of R15 000, was returned by the bank due to insufficient funds. No entries have yet been made.
   6. Goods sold on credit to S Wonder for R5 800 were correctly recorded in the debtors’ journal but incorrectly posted as R8 500 to S Wonder’s account in the Debtors’ Ledger.

Answers to worked example 1 (see page 89)

Calculate the correct closing balance of the debtors’ control account on 31 March 2011.
200 0003 – 2 6003 (A) + 1 8003 (B) + 15 0003 (E)
= 214 200 [5]

Calculate the correct amounts owing by the following debtors of Crystal Traders:

[12]

Worked example 2: Debtors’ age analysis
Study the debtors’ age analysis below and answer the questions that follow:

Credit terms

• Debtors are given 60 days from statement date (end of the month) in which to settle their debts.
• Debtors settling within 60 days will be granted a discount of 10%.
• Debtors older than 60 days are charged interest of 12.5% p.a.

Required

1. Which debtor(s) are not adhering to (meeting) the credit terms?
   Why? (2)
2. If Z Ndlovu settled her account after receiving her statement, and within the credit terms, how much would she be required to pay? (4)
3. If these were the only 3 debtors, what would the balance on the debtors’ control account be? (2)
4. Is this business controlling their debtors effectively? Explain, quoting figures. (4)
   [12]

Answers to worked example 2 (see page 93)

1. Which debtor(s) is/are not adhering to (meeting) the credit terms? Why?
   B. Barney
   He owes amounts for longer than the credit terms of 60 days.  [2]
2. If Z Ndlovu settled her account after receiving her statement, and within the credit terms, how much would she be required to pay?
   R3 000 – 10% (R300) = R2 700 [4]
3. If these were the only 3 debtors, what would the balance on the debtors’ control account be?
   Total of debtors’ accounts = balance on debtors’ control account.
   R13 50033 [2]
4. Is this business controlling their debtors effectively? Explain, quoting figures.
   The answer to this question could be yes or no.
   Yes, because only one of the 3 debtors is outstanding.
   or
   No, because the amount outstanding for more than 60 days is R1 700 out of the total of R13 500 owed by the debtors. [4]

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