Theory question 109
Control AccountsAde, a trader, had the following balances in the creditors ledger on October 31, 2020.
Kristy GH¢4,200
Erica GH¢8,700
The following transactions took place in November 2020.
November 4 Goods bought from Kofi GH¢17,400
4 Returned goods to Erica GH¢1,500
10 Goods returned to Kofi GH¢900
16 Goods bought from Mary GH¢10,500
21 Goods bought from Kofi GH¢14,100
24 Payment to Kristy after deducting discount of GH¢300: GH¢3,900
27 Payment to Erica after deducting discount of GH¢600: GH¢6,600
All purchases were on credit while all payments made through the bank.
You are required to prepare: (a) The individual creditors account; (b) The total creditors control account.
Show the model answer
(a) Individual creditors' accounts (GH¢):
Kristy: Cr Nov 1 balance b/d 4,200 | Dr Nov 24 bank 3,900; discount received 300 – nil balance.
Erica: Cr balance b/d 8,700 | Dr Nov 4 returns 1,500; Nov 27 bank 6,600; discount received 600 – nil balance.
Kofi: Cr Nov 4 purchases 17,400; Nov 21 purchases 14,100 = 31,500 | Dr Nov 10 returns 900; Nov 30 balance c/d 30,600.
Mary: Cr Nov 16 purchases 10,500 | Dr balance c/d 10,500.
(b) Total Creditors Control Account: Cr balance b/d 12,900; purchases 42,000 = 54,900 | Dr returns outwards 2,400; bank 10,500; discount received 900; balance c/d 41,100 = 54,900.
Closing balance 41,100 = Kofi 30,600 + Mary 10,500.
Post each supplier separately, then the control account uses the totals and must agree with them.