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Tutorial Control Account

The document outlines a tutorial on control accounts, specifically focusing on Mr. X's credit transactions for May 2023. It includes requirements for preparing a sales ledger control account, benefits of control accounts, sources of information for the account, and advice on creating a provision for doubtful debts. Additionally, it discusses a specific case involving a customer unable to pay their balance and the implications for accounting practices.

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Legentil Jemila
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9 views1 page

Tutorial Control Account

The document outlines a tutorial on control accounts, specifically focusing on Mr. X's credit transactions for May 2023. It includes requirements for preparing a sales ledger control account, benefits of control accounts, sources of information for the account, and advice on creating a provision for doubtful debts. Additionally, it discusses a specific case involving a customer unable to pay their balance and the implications for accounting practices.

Uploaded by

Legentil Jemila
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

TUTORIAL (CONTROL ACCOUNTS)

QUESTION
Mr X buys and sells on credit. He supplied the following for the month ended
31 May 2023.
2023 $
May 1 Trade receivables 5 687
May 31 Credit sales 72 641
Receipts from credit customers 64 500
Credit notes issued to customers 8 242
Cash discount allowed 1 894
Bad debts 800
Contra entry 300
The sales journal had been under-cast by $86. A cheque received and banked on
8 May from Mr Y for $ 2300 had been returned by the bank because of
insufficient funds.
REQUIRED
(a) Prepare the sales ledger control account for the month ended 31 May
2023. Balance the account at that date and bring the balance down on 1
June 2023.
(12 marks)
(b) State three benefits of using control accounts.
(6 marks)
(c) State two sources of information for the sales ledger control account.
(2 marks)
Mr X was informed that Mr Y was unable to pay his outstanding balance of
$2300. It was agreed that he would pay 40 cents for each dollar owed and he
sent a cheque on 26 June 2023 in settlement. The balance was written off as a
bad debt.
(d) Advise Mr X why he should create a provision for doubtful debts by
referring to the relevant Accounting concepts.
(10 marks)

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