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Receivables control ledger

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Receivables control ledger

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
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  • Author
    Posts
  • November 27, 2020 at 5:03 pm #596740
    SreeG
    Participant
    • Topics: 8
    • Replies: 8
    • ☆

    The following question has been asked in my model ACCA exams and shows only the right and wrong answer… It doesn’t show how the answer is obtained.

    Q)On 31 March Olsen Ltd had a balance of $62,840 on its receivables control account, compared to a total balance of $61,910 on the receivables ledger. Upon investigation it was discovered that:

    I. Late payment interest charged to customers on overdue amounts of $410 had not been recorded in the nominal ledger

    II. The balance on H Duck’s account of $390 had been omitted from the total of balances in the receivables ledger

    III. Sales returns of $825 had been treated as purchase returns in the nominal ledger

    In addition, the company decided to write off $150 in relation to an irrecoverable debt at the
    month end

    What was the corrected balance on the receivables control account at 31 March?

    a) $61,450

    b) $61,455

    c) $62,275

    d) $62,665

    The answer I got is a) $61450 which is obtained by adding $410 [Dr] , deducting $150 [Cr] and accounting for sales return by eliminating the wrong purchase return and accounting for sales returns by subtracting $825 two times, ie; $1650 to/(from) the opening balance of $62840.

    But the right answer shown is c) $62275. Can you please explain how the right answer is obtained.

    Thanks in advance.

    November 27, 2020 at 6:21 pm #596760
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    You are correct to add $410.

    You are correct to subtract $150.

    (ii) is irrelevant because it does not affect the total receivables account.

    For (iii) it should be entered in the receivables account (not in the payables account) and so it only affect receivable once (and not twice)

    So the correct balance is 62,840 + 410 – 150 – 825 = $62,275.

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