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Hey sir,
You were right about the error in that question and I’ve typed it again in here.In the SOFP at 31 Dec X5 , A Co reported net receivables of $12000. During 20X6, A Co made sales on credit $125000 & received cash from customers $115,500. At 31 Dec X6 , bad debts of $7100 and increased allowance for receivables by $950 to $2100. What is the net receivables figure at 31 Dec X6?
The answer is 13,450 as per book but I am getting the answer 14,400. Could you please tell me the reason ?Net receivables at the start of the year were 12,000. Since the allowance that the start of the year was1150 (2100-950), the the balance on the receivables account must have been 13,150 (12,000 + 1150).
The balance at the end of the year on receivables will be 13,150 + 125,000 – 115,500 – 7,100 = 15,550
The balance on the allowance for receivables account (from the question) at the end of the year will be 2,100.
Therefore the net receivables at the end of the year must be 15,550 – 2,100 = 13,450.
(I cannot tell you the reason for you getting 14,400, because I have no idea how you arrived at that figure 🙂 )
hey sir, I have a doubt in the following question:-
The total of a list of balances in R Co’s receivables ledger was $633,700 on 30 September 2014. This did not
agree with the balance on R Co’s receivables ledger control account. The following errors were discovered.
(i) A credit balance on an individual customer’s account of $200 was incorrectly
extracted as a debit balance
(ii) An invoice for $3,223 was posted to the customer account as £3,232
(iii) The total of the sales returns day book was overcast by $500
What amount should be shown in R Co’s statement of financial position for accounts receivable at 30 September
2014?
A $633,291
B $633,409
C $633,491
D $633,791Answer is option A.
My doubt is why we dont include the 3rd adjustment of sales return book.Thank you.
Adjustment (iii) does affect the difference.
The total will only affect the control account and will not affect the receivables ledger (because the ledger does not use the total – each individual amount is entered in the ledger).
However, since the question only gives the balance in the receivables ledger, this is not going to be affected by the total of the day book being wrong.
I really do suggest that you watch my free lecture on Books of Prime Entry.
(Our free lectures are a complete course for Paper F3 and cover everything needed to be able to pass the exam well.)
P & Co maintain a receivables ledger control account within the nominal ledger. At 30 November 20X0, the total of the list of individual balances extracted from the receivables ledger was $15,800, which did not agree with the balance on the receivables ledger control account. An examination of the books revealed the following information, which can be used to reconcile the receivables ledger and the receivables ledger control account.
1)The credit balance of $420 in Ahmed’s payables ledger account had been set off against his account in the receivables ledger, but no entries had been made in the receivables and payables ledger control accounts.
2)The personal account of Mahmood was undercast by $90.
3)Yasmin’s balance of (debit) $780 had been omitted from the list of balances.
4)Thomas’ personal account balance of $240 had been removed from the receivables ledger as a bad debt, but no entry had been made in the receivables ledger control account.
5)The January total of $8,900 in the sales daybook had been posted as $9,800.
6)A credit note to Charles for $1,000, plus sales tax of $300, had been posted to the receivables ledger control account as $1,300 and to Charles’ personal account as $1,000.
7)The total on the credit side of Edward’s personal account had been overcast by $125What is the revised total of the balances in the receivables ledger after the errors have been corrected?
ans:-$16,495
My doubt is why are we subtracting error 6 (300) and adding error 7(125) to the balance, we are supposed to do the opposite right?Thank You.
The balances in the receivables ledger are normally going to be debit balances.
In 6, the personal account has been credited with 300 too little. Correcting this by crediting reduces the balance owing.
In 7, there have been too many credit, reducing the credits increases he debit balance.
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