- 14 Marks
Question
b. Baba Enterprise’s receivables ledger control account on June 30, 2023, has a debit balance of ₦4,750,000, which did not agree with the net total of the list of receivables ledger balances as at that date. The following errors were discovered:
- Sales returns of ₦175,000 by Uda have been recorded in Uda’s account in the receivables ledger but the transaction was not posted to the general ledger.
- Credit sales of ₦200,000 to Chioma were not recorded in the control account but were recorded in the personal ledger of Chioma.
- An item of goods sold to Abe, ₦312,500, had been entered once in the sales day book but posted to his account twice.
- Baba Enterprise had expected Idowu to take advantage of a settlement discount of ₦32,750. Idowu did not settle the account on time to qualify for the discount. This has been recorded correctly in Idowu’s account but not entered in the general ledger.
- A bad debt amounting to ₦500,000 had been written off in the receivables ledger but had not been posted to the bad debts expense account or entered in the control account.
- Debit balances in the receivables ledger, amounting to ₦128,750, had been omitted from the list of balances.
- Payment of ₦120,000 received from Kwali was posted to the cash book but not recorded in the control account.
- Credit sales was overstated by ₦250,000 in the control account.
- No entry had been made in the control account in respect of the transfer of a debit of ₦89,000 from Taju’s account in the receivables ledger to his account in the payables ledger.
Required:
i. Make the necessary adjustments in the receivables control account and bring down the adjusted balance. (10 Marks)
ii. Reconcile the adjusted balance with the total balance in the individual receivables ledger account. (4 Marks)
Answer
i. Adjustments in Receivables Control Account:
Description | Debit (₦) | Credit (₦) |
---|---|---|
Balance b/d | 4,750,000 | |
Credit sales (Chioma) | 200,000 | |
Discount not received (Idowu) | 32,750 | |
Sales returns (Uda) | 175,000 | |
Sales overstated | 250,000 | |
Sales posted twice (Abe) | 312,500 | |
Payment not recorded (Kwali) | 120,000 | |
Bad debt written off | 500,000 | |
Debit balances omitted | 128,750 | |
Transfer to payables (Taju) | 89,000 | |
Balance c/d | 3,848,750 | |
Total | 5,786,500 | 5,786,500 |
Adjusted balance c/d = ₦3,848,750
ii. Reconciliation with Individual Ledger Balances:
Description | Amount (₦) |
---|---|
Corrected balance in the control account | 3,848,750 |
Add: Correction for double posting | 312,500 |
Less: Omitted debit balances | (128,750) |
Adjusted balance as per ledger | 4,032,500 |
- Tags: Ledger Balances, Receivables Control Account, Reconciliation
- Level: Level 1
- Topic: Control Accounts
- Series: MAY 2024
- Uploader: Dotse