Creditors reconciliation An incorrect discount percentage was allowed on invoice INV150. The business "Langabooi Traders" advertised a trade discount of 30%. However, only a trade discount of 20% was allowed. Both the business "Langbooi Traders and Lushaba suppliers recorded the invoice at the incorrect amount of R230 000.00 (in the creditors ledger on credit column and the statement for debtor lushaba suppliers on debit column) Complete the general journal of Lushaba suppliers , calculate the trade discount if the purchases recorded on the general journal say R25 000.00

Here are the calculations and the general journal entry for Lushaba Suppliers. Part 1: Correcting the invoice for Lushaba Suppliers Step 1: Calculate the original gross amount of the invoice. The invoice was recorded at R230,000 after a 20% trade discount. This means R230,000 represents 80% (100% - 20%) of the gross amount before any discount. Gross Amount = R230,0001 - 0.20 = R230,0000.80 = R287,500 Step 2: Calculate the correct net amount of the invoice. The correct trade discount should have been 30% of the gross amount. Correct Trade Discount = 0.30 × R287,500 = R86,250 Correct Net Amount = R287,500 - R86,250 = R201,250 Step 3: Determine the adjustment needed. The invoice was originally recorded at R230,000. The correct amount should be R201,250. The difference is the amount by which the invoice was overstated: Adjustment Amount = R230,000 - R201,250 = R28,750 Since Lushaba Suppliers is the seller and Langabooi Traders is their debtor, Langabooi's debt is currently overstated by R28,750. Lushaba Suppliers needs to reduce the debtor's balance. Step 4: Complete the general journal of Lushaba Suppliers. To reduce the debtor's balance, Debtors Control (Langabooi Traders) must be credited. The corresponding debit will be to Sales (to reduce the overstated revenue). |l|l|r|r| Date & Account and Explanation & Debit (R) & Credit (R) \\ XXXX & Sales & 28,750 & \\ & Debtors Control (Langabooi Traders) & & 28,750 \\ & To correct trade discount on INV150 from 20\% to 30\% & & \\ Part 2: Calculate the trade discount if purchases recorded are R25,000. This is a separate calculation. Assuming "purchases recorded on the general journal say R25,000" refers to the gross amount of purchases and the advertised trade discount of 30% applies. Trade Discount Amount = 0.30 × R25,000 = R7,500 The trade discount is R7,500. Send me the next one 📸