Chapter 2 - Control Accounts

Question 1
(i) Purchases Ledger Control Account

Balance b/d 328 Balance b/d 36,846

Discount Received 1,957 Purchases 276,220
Payments 258,972 Cash Refund 262
Purchases Return 3,116 Balance c/d 419
Bills Payable 1,118
Sales Ledger Contra 784
Balance c/d 47,472
313,747 313,747
Balance b/d 419 Balance b/d 47,472

(ii) Corrected Purchases Control Account

Balance b/d 419 Balance b/d 47,472

Purchases 200
Balance c/d 47,353 Purchases Returns 100
47,772 47,772

(iii) Statement Reconciliated with Purchases Ledger

Total of Balances in Purchases Ledger before corrections (Balancing
47,187 Figure)
i) Balance omitted from credit Balances 176
ii)Discount Received omitted from Creditors list (28)
ii) No Effect -
iii)Wrong entry in Creditor's account 18
v)No effect -
vi)No effect -
Total of Balances in Purchases Ledger after corrections 47,353
Chapter 2 - Control Accounts
Question 2

(a) Amended Sales Ledger Control a/c

$ $
Balance b/d 14,400 Return inward undercast 89
Sales day book undercast 2,000 Set off: purchase ledger 4,500
Discount allowed overcast 99 Balance c/d 11,910
16,499 16,499

(b) Statement reconciling sales ledger balances with control account

(DR)$ (CR)$
Total sales ledger balances before corrections 13,650 480
Less:
Gales's a/c wrongly debited (600+660) 1,260

13,650 1,740
11,910

(c ) Journal
DR($) CR($)
1 Suspense 1,260
A. Gale 1,260

2 Suspense 2,000
Sales 2,000

3 Return Inward 89
Return Outward 98
Suspense 187

4 Creditors' Control a/c 4,500

Debtors' Control a/c 4,500

5 Suspense 99
Discount Allowed 99
Chapter 2 - Control Accounts
Question 3

(a)
Sales Ledger Control Account
19-6 $ 19-6 $
01-Jan balance b/d 15,950 01-Jan balance b/d 570
31-Dec Sales 221,890 31-Dec Bank 179,910
31-Dec Bank (unpaid cheques) 150 31-Dec Returns inwards 75
31-Dec Bank 260 31-Dec Contra 1,405
31-Dec balance c/d 56,290
238,250 238,250
01-Jan balance b/d 56,290

(b)
Purchases Ledger Control Account
19-6 $ 19-6 $
31-Dec Bank 97,450 01-Jan balance b/d 16,330
31-Dec Contra-Sales Ledger 1,405 31-Dec Purchases 128,400
31-Dec balance c/d 46,135 31-Dec Bank 260
144,990 144,990
01-Jan balance b/d 46,135

(c)
W. Hopper
19-6 $ 19-6 $
01-Jan balance b/d 12,340 31-Dec Bank 5,100
31-Dec Sales 6,930 31-Dec Returns Inwards 75
31-Dec Bank 150 31-Dec Contra 1,405
31-Dec Bank 260 31-Dec Balance c/d 13,100
19,680 19,680

Provision for doubtful debts = 50 % X 13100 = 6550

Balance Sheet (Extract)

$
Debtors
Less:Provision for Doubtful Debts 49,740
.
Chapter 2 - Control Accounts
Question 4

(a) Amended Sales Ledger Control a/c

$ $
Balance b/d 8,792 Bad Debt 650
Discount allowed overcast 190 Sales overcast due to
Sale of a Fixed Asset treated as sales/return basis 460
receipt from debtor 1,450 Balance c/d 9,322
10,432 10,432

(b)
Journal
DR($) CR($)

1 Suspense 190
Discount Allowed 190

3 Suspense 210
Jackson 210

5 S. J Austin 1,450
Delivery Van disposal A/c 1,450
Chapter 2 - Control Accounts
Question 5

(a)
Amended Purchase Ledger Control Account
19-7 $ 19-7 $
31-May Purchases overstated 250 31-May balance b/d 25,450
31-May Ret. Outwards omitted 800 31-May Purchases undercast 2,220
31-May balance c/d 26,620
27,670 27,670
01-Jun balance b/d 26,620

(b)
Statement reconciling Purchase Ledger balances with Purchase Ledger Control Account
$
Total of Purchase Ledger balances before correction 27,620
1 Creditors account overstated (250)
2 Payment to creditor overstated 50
3 Returns outwards omitted (800)
4 No effect -
Total of Purchase Ledger balances after correction 26,620
Chapter 2 - Control Accounts
Question 6

(a) Sales Ledger Control a/c

$ $
Balance b/d 24,300 Balance b/d 710
Sales 312,000 Sales Return 14,600
Balance c/d 530 Bad debts 970
Discount Allowed 1,090
Cash 287,090
Balance c/d 32,370
336,830 336,830

(b) Purchase Ledger Control a/c

$ $
Balance b/d 1,100 Balance b/d 33,900
Purchase Return 23,400 Purchases 345,600
Cash 343,200 balance c/d 390
Discount Reveived 2,910
Balance c/d 9,280
379,890 379,890

(cTrading
) And Profit Loss Account for the year ended 31-Oct-91
$ $
Sales Revenue
Sales 312,000
Sales Returns (14,600) 297,400

Cost of Goods Sold:- (W1)

Purchases 345,600
Purchases Returns (23,400)
Opening Stock 32,100
Closing Stock (126,750) 227,550
Gross Profit (See workings) 69,850
Expenses
Bad Debts 970
Discounts Allowed 1,090
Administrative Overheads 45,100 (47,160)

Other Incomes
Discounts Received 2,910
Net Profit 25,600
**Stolen Stock being insured is not to be treated as an expense

Workings
Purchases (after trade discounts) = 90% of 384000 =$ 345,600
Purchases Returns (after discounts) = 90% of 26,000 = 23,400

Normal Selling Price of Goods costing $9,000

Selling Price - (25% of S.P) = 9,000
Selling Price 12,000
Actual Selling Price = 1/2 the normal selling price => $ 6000
=> Gross loss on this sale=$ 3000
Gross Profit on Rest of sales=25% of $(297400 - 6000) => $ 72850
Overall Gross Profit = $ (72850-3000) => $69,850

COGS=Purchases - Purchases Returns - Closing Stock + Opening Stock

297400 - 69850=322200 - C.S. + 32100 => C.S.=$ 126750
Chapter 2 - Control Accounts
QUESTION 7

(a) Aurora Ltd

Purchases Ledger Control Account
1995 1995

01-May Balance b/d 100 01-May Balance b/d 7,660

Discount Received 960 Purchases 33,650
Bank/Cash 23,750 31-May Balance c/d 80
Set Off 3,500
31-May Balance c/d 13,080

41,390 41,390

01-Apr Balance b/d 80 01-Apr Balance b/d 13,080

Aurora Ltd
Sales Ledger Control Account
1995 1995

01-May Balance b/d 17,100 01-May Balance b/d 100

Sales 42,100 Sale Returns 890
Dishonoured Cheques 470 Discount Allowed 700
Cash (Refunds) 270 Receipts (Bank/Cash) 29,420
31-May Balance c/d 140 Bad Debts 1,100
Set Off 3,500
31-May Balance c/d 24,370

60,080 60,080

01-Apr Balance b/d 24,370 01-Apr Balance b/d 140