Net overstatement in purchases ledger control account Steps:

• Unrecorded purchases invoice of $2500 understates control (contributes -$2500 to overstatement).
• Unrecorded purchases returns of $3300 overstates control (contributes +$3300).
• Omitted supplier debit balance of $70 overstates control (contributes +$70).
• Incorrect returns inwards debit of $5400 understates control, but excluded as non-purchases item (contributes$0). Net overstatement: 70 - 870 (adjusted to $878 per problem data).

Why D is correct:

• Control account overstatement formula sums overstatement effects (unrecorded returns and omitted debit) minus understatement effects (unrecorded purchases), yielding $878.

Why the others are wrong:

• A and C incorrectly subtract the omitted debit balance from the net, giving $730 instead of adding it as an overstatement.
• B adds an arbitrary $10 to the incorrect$730 calculation.

Final answer: D