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Whilst carrying out reconciliation between the receivables’ ledger control account and the receivables’ ledger, Charlie found that the sales returns day book had been undercast by $20.
How should this error be corrected in the receivables’ ledger control account and the list of balances per the receivables’ ledger?
Receivables’ ledger control account List of balances
A. Credit $20 Subtract $20
B. Debit $20 Subtract $20
C. No correction required. Subtract $20
D. Credit $20. No correction requiredCorrect answer as per answer sheet is D…. Can anyone tell me why?
The total of the sales returns book is only used for posting in the nominal/general ledger.
(In the receivables ledger we enter each individual amount and therefore the total is not relevant).Since the total in the day book is wrong, the receivables ledger is not affected.
However the control account will be wrong – they will have credited receivables control with too low and amount, and so to correct it we need to credit with an additional 20.I do suggest that you watch our free lectures 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.
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