Credit Note Misrecording Detected in Ledger Reconciliation

Steps:

• Credit note reduces supplier balance but Henry records it as a purchase, increasing the balance in purchases journal and ledger.
• This creates a discrepancy between Henry's supplier account and the supplier's actual records.
• Supplier statements reflect the credit note application, showing a lower balance.
• Comparison highlights the error in the individual supplier account.

Why B is correct:

• Purchases ledger tracks individual supplier balances; reconciling with supplier statements (per standard accounting procedure) identifies unapplied credits or errors in specific accounts.

Why the others are wrong:

• A: Cash book-bank reconciliation detects cash flow issues, not purchase ledger errors.
• C: Control account preparation summarizes totals; individual credit note errors may not cause imbalance.
• D: Balance control account (likely nominal ledger) oversees overall balances, missing specific supplier discrepancies.

Final answer: B