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Hallo,
I have two examples that I am trying to make a conclusion of. It’s about reconciling receivables ledger control a/c, receivables ledger, sales day book and cash book, where needed.
I am wondering if the two examples contradict or say one and the same as conclusion.
They say:Ex 1:
The sales day book was overcast by $2,100.
Answer: if a day book has been miscast, this adding up error will only affect the control account. To correct this, we subtract 2100 only from the Receivables ledger control a/c.
Q 1: If the mistake is in the sales day book, why this doesn’t affect as well the receivables ledger, when the sales day book is the primary source of data?Then,
Ex 2:
The discounts allowed column in the cash book has been undercast.
Answer: Any casting error will only affect the control account, which contains totals
(whereas the individual accounts contain individual amounts). At the same time this error, doesn’t require an entry in the receivables ledger, but in the receivables ledger control a/c.
Q 2: Same Q as in Ex 2, why it is not necessary to make a corrective entry in the receivables ledger control a/c, when using the cash book as book of prime entry, we use the data from there for the double entry accounts, e.g. the individual receivable a/c and the discount allowed a/c, isn’t it?Thank you!
The answer to both your questions is the same.
In the receivables ledger (which is not part of the double entry) we record each figure separately from the day book and from the cash book, in the relevant account for the individual customer.
In the control account (which is part of the double entry) we use the totals from the day book and from the cash book.
If the books have been totalled wrongly, then the amounts in the control accounts will be wrong. However, the individual figures in the books (and therefore in the receivables ledger) are still correct.I suggest that you watch my free lecture on books of prime entry 🙂
Hallo,
I didn’t know that the receivables ledger is a separate recording where the data is not taken directly from the sales day book or the cash book.
This explains, why the control a/c might be different from the receivables ledger, and why it is not needed to correct both, but only the control a/c, when the sales day book and the cash book total amounts are wrong.
Thank you!
But the data is taken directly from the sales day book or the cash book.
The point is that each individual entry is copied from there – not the totals.The totals are only used in the receivables ledger control account, and therefore if the totals are wrong it is only the control account that is affected.
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