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From one of the BPP revision kits
During the year ended 31 December 20X1, Alpha Rescue had the following transactions on thereceivables ledger.
$
Receivables at 1 January 20X1 100,000
Receivables at 31 December 20X1 107,250
Goods returned 12,750
Amounts paid into the bank from receivables 225,000
Discount received 75,000
Discounts allowed 5,000
What were the sales for the year?and this is the solution:
C $250,000
RECEIVABLES LEDGER CONTROL ACCOUNT$ $
Bal b/f 100,000 Bank 225,000
Sales (balancing figure) 250,000 Discounts allowed 5,000
Returns 12,750
Bal c/f 107,250
350,000 350,000So my main question is ….. What ? 🙂 I swear this is exactly how it is solved. How come the year ending balance of AR somehow ends up on the credit side ? Also, shouldn’t the 107250 ( the ending AR ) be where the 350 0000 is ? ie shouldn’t we work back from it.
Any help is appreciated
ThanksShame, it scrunched up the t account. it might be too difficult to see but on the debit side are only Bal b/f 100,000, and Sales (balancing figure) 250,000. All the rest is credit side. All adds up to 350K.
The t-account is balanced in the normal way. The closing balance is carried forward from the credit side (and will be brought forward on the debit side – which is correct because it is an asset).
The 350,000 is the total which is needed to get the missing figure.
I do suggest that you watch my free lectures on double entry bookkeeping where I explain how we balance off accounts.
(The lectures are a complete free course for Paper F3 and cover everything needed to be able to pass the exam well).
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