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Hallo,
In this example:
“Oswald made a contra entry for $120 between the accounts in the sales ledger and
purchases ledger for Razek. He recorded the transaction by debiting the account in the
sales ledger and crediting the account in the purchase ledger with $120.”– they say – the errors should be corrected, but if the sales and purchase ledger, are actually the receivables and purchases accounts, we actually do debit receivables and do credit payables. Where is the error that they talk about?
Thank you!
The sales ledger is another name for the receivables ledger.
The purchases ledger is another name for the payables ledger.A contra entry always reduces receivables and reduces payables.
So they should have credited the account in the sales ledger, and debited the account in the payables ledger.
It might be helpful to you to watch my free lecture on Books of Prime Entry.
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