HELP NEEDED! AAT Level 3 - Advanced Bookkeeping Mock Exam Question.

L3X

Hi I wonder if anyone can help me with this mock question that keeps coming up in Task 4 of the Mock exams:

You are now ready to prepare the reconciliation of the purchase ledger to the PLCA.

The total of the balances in the purchase ledger is £10370. The total has been compared with the £11,480 balance on the PLCA. After investigation the following errors were found:

1. A supplier account with a credit balance of £590 was omitted from the total.
2. A Contra entry for £130 has been made in the subsidiary ledger but not in the general ledger.
3. A cash payment to supplier Z was entered in to this account as £460 instead of the correct amount of £640.
4. A Purchase invoice of £285 was posted to the supplier account as a credit note.

Use the below table to show the THREE adjustments you need to make to the listing of purchases ledger balances.

Adjustments | Amount | Add | Deduct

Thanks

Lex

Mike Webster

L3X

Hi Michael,

Thank you for the help, I think i'm a little clearer on this now. Just one question, what is contra?

Thanks
Lex

Mike Webster

A contra entry is used when one of your customers is also one of your suppliers so, instead of you writing a cheque to pay your supplier and the supplier (who is also your customer) writing a cheque to pay you, you just use the contra system. Does this help?