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a receivables ledger control account had a closing balance of 85000. it contained a contra to the purchase ledger of 400,but this had been entered in the wrong side of control account.
what is the correct balance on the control account should be..
ans is 7700.. but how to do by making ledger account?Either you have mistyped the question, or there were typing errors in the question itself.
The receivables balance must have been 8500, the contra 400, and the correct answer 7700)On the receivables account there is a debit balance of 8500.
A contra entry always reduces receivables (and reduces payables) and so during the year they should have credited receivables. Instead they have debited receivables with 400, and so the final balance was higher than it should have been.
So…..we need to credit receivables with 400 to cancel the incorrect entry. Then we need to credit receivables with 400, which is what should have happened.
The end result being that the correct balance is 8500 – 400 – 400 = 7700.(Please do not start different threads with the same title ‘Control Accounts’. Either ask the questions in the same thread (if it is on the same topic), or use a different title 🙂 )
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why 8500 in debit side.. isn’t a closing supposed to be in credit side?
Receivables are an asset, and assets are always debit balances. (We used to call receivables debtors – because they were debit balances.)
I think you are getting confused with the way we ‘close-off’ accounts. If you have not already watched, then you really should watch the free lecture on ‘Double entry bookkeeping’.
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thank yuh so much 🙂
At 1 april 2009, the payables ledger contol account showed a balance of 142320 $
At the end of april the following is extracted from subsidiary books for April.Purchase day book 183800
It also discovered that the purchase day book figure is net of sales tax at 17.5%; the other figures all include sales tax.
What is corrected balance of payable ledger control account?You have not given enough information.
The payables ledger control account will be credited with the purchases on credit (the purchase day book total plus sales tax at 17.5%).
However to get the balance at the end of April we need to know how much case was paid during the month as well.Help needed: chapter 16, test question 6
The Payables Ledger Control Account has a number of errors that needs to be corrected.
Why does the correction of “refunds received from suppliers” of $2,700 on the credit side of the payables control account? Doesn’t that mean the amount owing to the supplier is being increased – which is totally contrary to what the narrative says?A refund is another word for a repayment of cash.
Suppose we owed a supplier $1,000. We would have a credit balance of $1000 on the payables account.
Suppose we paid the supplier $1500 (we paid too much by mistake).
We would Cr Cash and Dr Payables with $1500.
So then we would have a debit balance of $500.The supplier would give us back the extra $500 that we had paid by mistake – a refund of $500.
When we get it, we Dr Cash and Cr Payables $500.Now the balance on payables is zero, and everything is perfect 🙂
Hope that helps!
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