QUESTION 1 – STUDY UNIT 13: CURRENT LIABILITIES

1. The following is an extract from the general ledger of Smart Boutique for December 20.1:
Dr Trade receivables control Cr
R R
20.1 20.1
Dec 1 Balance (correct) b/d 16 095 Dec 31 Sales returns (credit sales) 2 220
31 Bank (total: trade receivables Credit purchases 33 801
column) 45 495 Cash purchases 1 008
Settlement discount granted 685 Settlement discount received 275
Credit sales 48 165 Bank (total trade payables
Drawings 150 column) 3 980
Purchases returns (credit Balance c/d 70 587
purchases) 2 131
112 296 112 296
20.2
Jan 1 Balance b/d 70 587

2. Additional information
2.1 An inexperienced bookkeeper prepared the trade receivables control account.
2.2 In addition to the errors made in the trade receivables control account above, an investigation
revealed the following:
 The total of the trade receivables balances as per the list of trade receivables at
31 December 20.1 amounted to R16 060.
 An amount of R115, which has been written off as credit losses, has erroneously been
added to the credit sales amount of R48 165. This entry has been posted correctly to the
applicable account in the trade receivables ledger.
 The sales journal was overcast by R420.
 Credit sales of R170 was posted correctly to the sales account and the trade receivables
control account in the general ledger but was not posted to the specific debtor’s account
in the trade receivables ledger.
 Credit note number 003 for R70 was recorded correctly in the sales returns journal but
posted to the wrong side of the personal account of the debtor in the trade receivables
ledger.
 The trade receivables column in the cash receipts journal includes an amount of R195
being a cash settlement discount received from a creditor.
 The purchases journal was under-cast by R718.
 An account of R1 603 for freight on credit sales was received from Quick Transport. The
cost of the freight must still be accounted for in the accounting records.
 The R/D cheque of R425 was the cheque of a debtor in payment of his account. The
cheque was returned because the debtor had insufficient funds to cover the cheque.
 On 1 December 20.1, the balance of the trade payables control account amounted to
R8 340.
REQUIRED:
(a) Prepare the correct, properly balanced trade payables control account for Smart Boutique for
December 20.1.
QUESTION 2 – STUDY UNIT 13: CURRENT LIABILITIES

The following information pertains to Zakzak Traders at 28 February 20.5

Debit Credit
R R
Trade payables control balances………………………………………….. 250 34 515
Trade payables ledger (net total of the list of balances R33 535)..……. 1030 34 565

Moabelo Moremi, the owner of Zakzak Traders, requested you to investigate why the balances of the
trade payables control account differed from the net total of the list of balances of the creditors in the
trade payables ledger. Your investigation disclosed the following:
1. The trade payables column in the purchases and purchases returns journals were undercast
by R3 850 and R1 500 respectively.
2. The trade payables column in the cash payments journal was overcast by R1 500.
3. The account of a creditor, Langeman CC, with a credit balance of R 3600, was omitted from
the trade payables list.
4. An original credit note received from Balantu Importers for R285 was recorded correctly in the
purchases returns journal but was inadvertently posted as R825 to that entities account in the
trade payables ledger.
5. A discount of R1 570, which was received from Bila Clothing, on settlement of Zakzak Traders
account, was not recorded in the account of Bila Clothing in the trade payables ledger.
6. The debit balance of R 1030 in the trade payables ledger, was in respect of overpayments to
creditors. This amount, that includes the opening debit balance of R250 in the trade payables
control account, must be transferred to the trade receivables ledger. The creditors have
agreed to this transfer.
7. An electronic payment of R 6 500 to Sefako Wholesales, a creditor, was recorded as R5 600
in the cash payments journal and posted as such to the general and trade payables ledgers.
8. The credit balance of Mmela Shopfitters of R445 was recorded twice on the list of trade
payables at 28 February 20.5.
9. The purchase of merchandise from Andries Traders for R1 450 was recorded correctly in the
purchases journal but was posted to the wrong side of Andries Trader’s account in the trade
payables ledger.
10. It was noted that there were credit balances amounting to R1 855, that appeared in the trade
receivables ledger. Further investigations disclosed that these balances were in respect of
transactions that were concluded with creditors accounts during February 20.5.The
inexperienced bookkeeper opened these creditors accounts in the trade receivables ledger.
The trade payables control account was, however, not affected by these incorrect entries.
11. The totals of the journal debits and credits for trade payables were R1 300 and R3 600
respectively.
REQUIRED
Take the above information into account and prepare the following in the accounting records of
Zakzak Traders
(a) The trade payables control account in the general ledger at 28 February 20.5.
(b) The adjusted list of trade payables balances at 28 February 20.5.