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I had the scenario as follows:
P & Co maintain a receivables ledger control a/c within the nominal ledger. At 30 November 20X0, the total of the list of individual balances extracted from the receivables ledger was $15,800, which did not agree with the balance on the receivables ledger control account. An examination of the books revealed the following information, which can be used to reconcile the receivables ledger and the receivables ledger control acount.
1. The credit balance of $420 in the Adhem’s payables ledger account had been set off against his account in the receivables ledger, but no entries had been made in the receivables and payables ledger control accounts.
2. The personal account of Mahmood was undercast by $90
3. Yasmin’s balance of debit $780 had been omitted from the list of balances
4. Thomas’s personal account balance of $240 had been removed from the receivables ledger as a bad debt, but no entry had been made in the receivables ledger control account.
5. The January total of $8900 in the sales daybook had been posted as $9800
6. A credit note to Charles for $1000, plus sales tax of $300, had been posted to receivables ledger control account as $1300 and to Charles’s personal account as $1000
7. The total on the credit side of Edward’s personal account had been overcast by $125
I don’t understand the question…Does it offer me to correct each transaction?
Which of these items need to be corrected by journal entries in the nominal ledger?
Could you give me a hint or instruction to complete this question?I have asked you before, but you have not replied – have you watched our free lectures?
This should all be clear if you have watched the lectures on Books of Prime Entry.The control accounts are in the nominal ledger. The personal accounts are in the payables and receivables ledger and are not part of the double entry.
So items 1, 4, and 5 need entries in the nominal ledger.
You have not typed what the requirement of the question is!
Also, surely you have an answer in the same book in which you found the question (if not then you should be using a different book), so it is better if you write here what problems you are having with the question – you cannot expect me to simply produce an answer!
Thanks for your advice, I missed out the chapter Books of Prime Entry so let me review it again.
Hi John,
that question is actually in the ICAEW question bank, therefore it has not been written by BPP.What’s interesting is that note 5 is completely irrelevant in getting to an answer and customers in credit, debit who have been undercast AND overcast all have their figures added to the original total of 15,800. Only tax is deducted.
Perhaps this link will help: https://opentuition.com/topic/receivables-ledger/
It is irrelevant who had written it 🙂
We have nothing to do with BPP and the topic is the same whoever writes the question!The reason that note 5 is irrelevant is, of course, because the total from the sales daybook only affects the control account.
The question gives the total of the balances on the receivables ledger and they are not affected at all by whether the total of the daybook was right or wrong.Again – have you actually watched my free lectures on book of prime entry? 🙂
Ryan is a business selling umbrellas branded with corporate logos. The umbrellas are sold in bulk lots on credit. The accountant is carrying out a reconciliation of the receivables ledger control account balance, which is $172,120 to the total of the balances on the individual accounts in the receivables ledger, which is $176,134.
The following has been found:
(1) A contra item of $1,500 has not been entered in the receivables ledger control account.
(2) A cheque for $555 from a customer has been dishonoured. The correct double entry has been posted but the individual accounts have not been updated.
(3) A payment of $322 from a customer has incorrectly been entered in the accounts receivable ledger as $233.
(4) Discounts given totaling $120 have not been entered in the control account.
(5) Cash received of $800 has been debited to the individual customer’s account in the accounts receivable ledger.
(6) Total credit sales of $4,500 to a large accountancy firm, Close & Counter have been posted correctly to the ledger account but not recorded in the control account.
Correct the receivables ledger control account and reconcile this to the sum total of the individual accounts in the accounts receivable ledger.
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