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in reconciling the receivable ledger control account with the list of receivable ledger balances, the following errors were found:
1. sales daybook was overcast by 370
2. a total of 940 from cash receipts book had been recordedin the receivable ledger control a/c as 490what adjustments must be made to correct the errors?
a. credit sales control account 820. decrease total of RL balances by 820
b. credit sales control account 820. no change in RL balances
c. debit sales control account 80. no change in RL balances.
d. debit sales control account 80. increase total of RL by 80.
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correct answer is b.
my answer was c. my working:
1. overcasting means we need to decrease balance by 370
2. 450 (940-490) was recorded too little, therefore the balance has to be increase by 450this means:
(370)+450=80
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by the way: the term “sales control account” is same as the receivable ledger control account?
B is correct.
The overcasting of 370 does mean that we need to decrease the balance – so CR Receivables ledger control with 370
Cash receipts also reduce the balance, but they have recorded too small a receipt and so they need to also CR with the extra of (940 – 490) 450.
So in total we need to credit with 820.
Yes – the sales ledger control account is another name for the receivables ledger control account. It is dreadful that it should use both names in the same question.
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