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I need help with this question ?
The balance on the debtors control account is $78,547 while the listing of balances from the debtor’s ledger is $78,747.The following differences have been identified:
1. Discount allowed to customers totalling $765 have been posted only to customers account.
2. The cash book had been incorrectly added with the total being overstated by $99.
3. An invoice for $670 had been posted to the customer’s account as $760.
4. A credit balance on a customer’s account of $388 had been listed as a debit balance.
Required: control account amended balance ($77,881) and reconciliation statement.Before I answer, when you are taking your exam?
I ask because for exams from 20 September, control accounts are no longer in the syllabus and cannot be examined (and even for exams before 20 September, although you can be asked about control accounts you can never be asked to prepare a reconciliation statement in the exam).
Hey, thanks for your response, and about my exam it’s unfortunately before 20th of September.
OK, here goes 🙂
For item 1, the debtors ledger is correct, but the control account is wrong and so the balance on the control account balance needs reducing by the discount of 765,
For item 2, if the total is 99 too much then this only affects the control account (it is only the control account which uses totals) and so the cash received was actually lower by 99 and so the control account balance need increasing by 99.
For item 3, the control account is correct but the total of the debtors ledger balance is wrong and needs reducing by the difference of 90.
For item 4, the control account is correct but the total of the debtors ledge balances is wrong and needs to be reduced by 2 x 388 = 776 because it was entered on the wrong side of the account.
So the correct balance on the control account is 78547 – 765 + 99 = 77881
and the correct total of the balances in the debtors ledger is 78747 – 90 – 776 = 77881Have you watched my free lectures on control accounts and on books of prime entry?
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