Theory question 104
Control AccountsThe following balances have been extracted from the books of Willy Billy Limited:
1/1/86 Purchases Ledger Balance CR: ₦11,874
1/1/86 Sales Ledger Balances: ₦19,744
Total for the year 1986:
Purchases Journal: ₦154,652
Sales Journal: ₦199,662
Returns Outwards Journal: ₦2,648
Returns Inwards Journal: ₦4,556
Cheques paid to Suppliers: ₦146,100
Petty Cash paid to suppliers: ₦78
Cheques and Cash received from customers: ₦185,960
Discounts allowed: ₦5,830
Discounts received: ₦2,134
Bad debts written off: ₦394
Customers cheque dishonoured: ₦30
Balance on Sales Ledger set off against balances in Purchases Ledger: ₦1,036
31/12/86 Purchases Ledger: ₦14,530
31/12/86 Sales Ledger: ₦21,658
You are required to prepare the Control Accounts.
Show the model answer
Purchases Ledger Control Account
Dr: returns outwards 2,648; bank 146,100; petty cash 78; discounts received 2,134; sales ledger set-off 1,036; balance c/d 14,530; total 166,526
Cr: balance b/d 11,874; credit purchases 154,652; total 166,526 → closing creditors ₦14,530, which agrees with the purchases ledger
Sales Ledger Control Account
Dr: balance b/d 19,744; credit sales 199,662; dishonoured cheque 30; total 219,436
Cr: returns inwards 4,556; cash and cheques 185,960; discounts allowed 5,830; bad debts 394; purchases ledger set-off 1,036; balance c/d 21,660; total 219,436
Closing debtors ₦21,660 (the sales ledger list of ₦21,658 is ₦2 short, so the ledgers should be checked)
Set-offs (contras) appear in both control accounts: credit sales ledger control, debit purchases ledger control.