Theory question 103
Control AccountsThe following balances were extracted from the books of Tomiwa & Co. Ltd as at 31st December 1990
Opening balances: Debtors ₦4,000; Creditors ₦3,300
Purchases: On credit ₦16,500; Cash ₦7,400
Sales: On Credit ₦25,500; For Cash ₦10,200
Payment to creditors ₦15,000
Receipt from debtors ₦23,600
Cash discount allowed ₦540
Cash discount received ₦400
Trade discount allowed ₦12,000
Returns Inwards ₦760
Returns Outwards ₦215
Control Settlement ₦500
Bad Debts written off ₦85
Provision for bad debts ₦120
Bills receivable ₦600
Cheques dishonoured ₦1,045
Bills Payable ₦1,020
You are required to prepare (i) Sales Ledger Control Account (ii) Purchases Ledger Control Account
Show the model answer
(i) Sales Ledger Control Account: Dr balance b/d 4,000; credit sales 25,500; dishonoured cheques 1,045; total 30,545 / Cr bank 23,600; discount allowed 540; returns inwards 760; bad debts 85; purchases ledger (contra) 500; bills receivable 600; balance c/d 4,460; total 30,545
(ii) Purchases Ledger Control Account: Dr bank 15,000; discount received 400; returns outwards 215; sales ledger (contra) 500; bills payable 1,020; balance c/d 2,665; total 19,800 / Cr balance b/d 3,300; credit purchases 16,500; total 19,800
Left out: cash purchases and cash sales (no debtor/creditor), trade discount (never in the ledger), provision for bad debts (not a debtor's account)
Cash sales, cash purchases, trade discount and provisions never enter control accounts.