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May 12, 2016 at 4:01 pm #314799penny7780
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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 $1.
There is one question that I don’understand:
What is the revised total of the balances in the receivables ledger after the errors have been corrected?
The answer given shows that we should add $125 to the receivables ledger but since it is overcast,I think we should deduct it from the receivables ledger.Could you tell me why?
Thank you very much!May 13, 2016 at 8:56 am #314885John MoffatKeymaster
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I have no idea at all where you are getting $125 from!
Having found the question in the BPP Revision Kit (in future it would help if you said which question it was, rather than typing it all out!) I see that you have mistyped error number 7. The overcast was $125 and not $1.
Receivables are debit balances. Since the credit side has been overcast, the current debit balance is too low and therefore needs increasing.
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