Theory question 106
Control Accounts6. The following balances were extracted from the books of Olusesi Enterprises on 31st March, 2003:
Sales ledger balance – 1/4/2002 N22,000
Purchases ledger balance – 1/4/2002 N30,000
Sales day book N420,000
Purchases day book N331,000
Cash received from customers N119,000
Cash paid to creditors N132,000
Returns outwards day book N5,000
Returns inwards day book N4,000
Bad debt written off N600
Bills dishonoured N4,500
Discounts allowed N1,200
Discount received N700
Credit notes received N800
Bills payable N200
Cash refund to customers N500
Debit notes issued N1,340
Bills receivable N800
Contra settlement N300
Cash refund from creditors N1,000
You are required to prepare: (a) Sales Ledger Control Account; and (b) Purchases Ledger Control Account.
Show the model answer
(a) Sales ledger control: Dr balance b/f 22,000; sales 420,000; bills dishonoured 4,500; cash refunded 500; debit notes issued (extra charges to customers) 1,340 = 448,340. Cr cash 119,000; returns inwards 4,000; bad debts 600; discounts allowed 1,200; bills receivable 800; contra 300; balance c/d 322,440.
(b) Purchases ledger control: Dr cash 132,000; returns outwards 5,000; discount received 700; credit notes received 800; bills payable 200; contra 300; balance c/d 223,000 = 362,000. Cr balance b/f 30,000; purchases 331,000; cash refund from creditors 1,000 = 362,000.
Credit notes received reduce what we owe suppliers; debit notes issued are treated as extra charges to customers.