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A receivables ledger account had a closing balance of 8500$. It contained a contra to the payables ledger of 400$,but this had been entered on the wrong side of the control account.
what should be the correct balance on the control account?the answer is 7700$debit
but l can not undersand the solution way please explain,SirThe contra entry always reduced receivables and reduces payables.
Therefore they should have credited receivables.
In error they have debited receivables. To correct it, we need to credit receivables with 400 to cancel the wrong debit. Then we need to credit again with 400 which is what should have happened.
So in total we credit receivables with 800, which reduces the receivables balance to 7,700.
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