Learning Management System

Subject Name Financial Accounting 2

Tutorial 1

Topic Control accounts

Name: ……………………………. Lecturer: ……………………………………

Intake: ……………………………. Date: ……………………………………

Question 1

a) Explain three advantages to an organisation of preparing control accounts.

b) Using the following information, construct both a sales ledger and purchase ledger control
account for the month end of January 2013 and so calculate the creditor and debtor final position.

RM
Debtors at 1 January 27,971
Creditors at 1 January 15,725
Credit sales 42,500
Returns from debtors 800
Returns to suppliers 650
Payment received from debtors 35,675
Bad debts written off 450
Payment to creditors 19,750
Credit purchases for month 22,750
Discounts allowed 400
Discounts received 380

Question 2

On 30 June 20x9, the Debtors Control Account and Creditors Control Account showed the
following balances:
RM
Debtors Control Account 12,125
Creditors Control Account 12,870

The above balances, however, were different from the totals of the subsidiary books as at follow:
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RM
Debtors ledger 11,350
Creditors ledger 12,590

When the records were examined, the following errors were found and corrected:

(i) Sales of RM750 to Adam was not recorded in the books of the business.
(ii) Sales Returns Journal (total) had been undercast by RM385.
(iii) Purchases Returns Journal (total) had been overcast by RM240.
(iv) Bad debts written off RM400 was recorded in the Debtors Ledger but was not shown
in the General Ledger.
(v) Dishonoured cheque of RM500 was omitted from the books.
(vi) Discount received of RM180 which appeared in the memorandum column of the cash
book was omitted from the creditors ledger.
(vii) Paul’s balance of RM950 appeared in the debtors’ schedule as RM960.
(viii) George’s balance of RM770 appeared in the creditors’ schedule as RM670.
(ix) Purchase Journal (total) had been overcast by RM600.

Required:

(a) make adjustments to both the control accounts

(b) prepare a statement to reconcile the original totals of the subsidiary ledger with the new
control balances.

Question 3

On examining the books of Exports Co, you ascertain that on 1 October 20X8 the receivables
ledger balances were RM8,024 debit and RM57 credit, and the payables ledger balances on the
same date RM6,235 credit and RM105 debit.

For the year ended 30 September 20X9 the following particulars are available.

RM
Sales 63,728
Purchases 39,974
Cash from trade accounts receivable 55,212
Cash to trade accounts payable 37,307
Discount received 1,475
Discount allowed 2,328
Returns inwards 1,002
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Returns outwards 535

Irrecoverable debts written off 326
Cash received in respect of debit balances in payables ledger 105
Amount due from customer as shown by receivables ledger, offset
against amount due to the same firm as shown by payables ledger
(settlement by contra) 434
Allowances to customers on goods damaged in transit 212

On 30 September 20X9 there were no credit balances in the receivables ledger except those
outstanding on 1 October 20X8, and no debit balances in the payables ledger.

You are required to write up the following accounts recording the above transactions bringing
down the balances as on 30 September 20X9:

(a) Receivables control account

(b) Payables control account

Question 4
Alston’s payables’ ledger control account is an integral part of the double entry system.
Individual ledger account balances are listed and totaled on a monthly basis, and reconciled to
the control account balance.

Information for the month of March is as follows:

1. Individual ledger account balances at 31 March have been listed out and totaled
RM19,766
2. The payables’ ledger control account balance at 31 March is RM21,832.
3. Upon further examination the following errors are discovered:
• The total of discount received for the month, amounting to RM1,715 has not been
entered in the control account but has been entered in the individual ledger accounts.
• On listing-out, an individual credit balance of RM205 has been incorrectly treated as
a debit.
• A petty cash payment to a supplier amounting to RM63 has been correctly treated in
the control account, but no entry has been made in the supplier’s individual ledger
account
• The purchases day book total for March has been undercast (understated) by
RM2,000
• Contras with the receivables’ ledger, amounting in total to RM2,004, have been
correctly treated in the individual ledger accounts but no entry has been made in the
control account.

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Required:
(a) Prepare the part of the payables’ ledger control account reflecting the above information
(b) Prepare a statement reconciling the original total of the individual balances with the
corrected balance on the control account

Question 5
Happy sweet is a business selling umbrellas branded with corporate logos. The umbrellas are
sold on credit, rather than for cash. The accountant is carrying out a reconciliation of the
receivables’ ledger control account balance which is RM172,000 to the total of the balances on
the individual accounts in the receivables’ ledger, which is RM176,134.

The following has been found:

(i) A contra item of RM1,500 has not been entered in the receivables’ ledger control account
(ii) A cheque for RM555 from a customer has been dishonoured. The correct double entry
has been posted but the individual accounts have not been updated.
(iii)A Payment of RM322 from a customer has incorrectly been entered in the accounts
receivable ledger as RM233.
(iv) Cash received of RM800 has been debited to the individual customer’s account in the
accounts receivable ledger.
(v) Total credit sales of RM4,500 to a large accountancy firm, Close & Counter have been
posted correctly to the ledger account but not recorded in the control account.

Required:
Correct the receivables’ ledger control account and reconcile this to the sum total of the
individual accounts in the accounts receivable ledger.

Question 6

Wanwan Co, proves the accuracy of its receivables and payables ledgers by preparing monthly
control accounts. At 1 September 20x7 the following balances existed in the company’s
accounting records, and the control accounts agreed:

Receivables ledger control account RM186,220 (debit)

Payables ledger control account RM 89,290 (credit)

The following are the totals of transactions which took place during September 20x7, as
extracted from the company’s records.

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RM
Credit sales 101,260
Credit purchases 68,420
Sales returns 9,160
Purchases returns 4,280
Cash received from customers 92,700
Cash paid to suppliers 71,840
Cash discounts received 880
Irrecoverable debts written off 460
Refunds to customers 300
Contra settlements 480

Required:
Prepare the receivables ledger control and payables ledger control (total) accounts for the month
of September 20x7.

Question 7
The following details relate to debtors and creditors for the year ended 30 June 20x8:
RM
Balance as at 1 July 20x7:
Sales ledger (debtors) control account 85,000 (Dr)
3,500 (Cr)
Purchase ledger control account 2,300 (Dr)
53,500 (Cr)
Sales – cash 31,000
- credit 282,000
Purchases – cash 26,400
- credit 192,500
Return inwards 3,500
Returns outwards 3,250
Discount allowed 1,650
Discount received 1,350
Cash/cheques paid to creditors 145,600
Cash/cheques received from debtors 242,100
Bad debts written off 1,650
Interest on overdue accounts 1,000
Dishonored cheques 3,400
Contra 4,200
Doubtful debts allowance 3,650
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Allowance given to debtors for overcharge 900

Cheque received from by debtors 3,200

Required:

Prepare the sales and purchase ledger control account

Question 8
The purchase ledger at 31 August 20x9, has the following balances in the individual creditors
accounts:
RM
Su-Ann Enterprise 1,280
Anslam Sdn Bhd 5,872
Felix & Co. 3,839
Lee Ang Bhd 7,928
18,919
Note: all creditors have credit balance

The creditors control account in the general ledger has a credit balance of RM14,270. Upon
investigation on the accounting records for the month of August 2009, the following matters
revealed:-

(i) The total amount of purchases in the purchases journal was wrongly added. It should
be RM7,893 instead of RM7,839.
(ii) Discount received of RM125 from Anslam Sdb Bhd on the early settlement of debt
was credited to the creditors control account.
(iii) A payment of RM3,966 made to Lee Ang Bhd was not posted to creditors ledger.
(iv) A debit note issued to Felix & Co. for goods returns of RM623 was credited to the
creditors ledger under Felix & Co.
(v) The total amount of purchases returns of RM367 as recorded in the purchases returns
journal was not posted to creditors control account.
(vi) The credit purchases of RM2,000 from Su-Ann Enterprise was wrongly posted to
Anslam Sdn Bhd.

Required:

Write up the creditors control account to show the revised balance and adjust all the
individual creditors’ accounts at 31 August 20x9

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