FA-1 / FA-2 / FFA (F3) Financial Accounting

by Syed Munib

CONTROL ACCOUNTS & THEIR RECONCILIATIONS

Specimen:
ACCOUNTS RECEIVEABLE / SALES LEDGER CONTROL ACCOUNT
Opening balance Opening credit balance
Credit sales Discount allowed
Dishonored cheque Receipts
Interest charged Bad debts
Refund Contra- set off
Allowances for damaged goods
Return inwards

Closing credit balance Closing debit balance

ACCOUNTS PAYABLE / PURCHASE LEDGER CONTROL ACCOUNT

Opening debit balance Opening credit balance
Payments Credit purchases
Contra Refund received
Allowances for damaged goods
Discount received
Return outward

Closing credit balances Closing debit balances

Points to understand :
are updated through
Control A/C ---------------------------------> Periodic total of BOPEs
are updated through
Individual A/C ---------------------------------> Individual transactions related to customer/supplier in
Ledger the BOPE on real time basis
Cases which lead to difference between Control Account balance & LOB : Effect of error on:
Control A/C Individual Leger LOB
1. Error while recording individual transaction initially in any BOPE. Yes Yes Yes
2. Error while recording periodic totals of BOPE into Control A/C (i.e. Yes No No
main ledger)
3. Error while recording individual transactions from BOPE into No Yes Yes
Individual Ledger (i.e. Subsidiary Records)
4. Error while casting BOPE Yes No No
5. Error while casting or balancing Control A/C Yes No No
6. Error while casting or balancing Individual ledger / List of Balances No Yes Yes

* Those errors which effects Control A/C shall be corrected in Adjusted Control Account, while those errors which
effects Individual ledger and List of Balances (i.e. subsidiary records) shall be corrected in Reconciliation statement.
Question 1.01:
You are required to prepare a sales ledger control account from the following information for the month of
November
2007 Rs.
Nov 1 Sales ledger balances 23,220
Totals for November:
Sales journal 14,194
Return inwards journal 826
Cheques and cash received from customer 17,918
Discounts allowed 312
30 Sales ledger balances 18,358

Question 1.02:
You are required to prepare a purchase ledger control account from the following information for the month of
April. The balance of the account is to be taken as the amount of accounts payable as on 30 April.
2005 Rs.
April 1 Purchases ledger balances 11,241
Total for April
Purchases journal 6,100
Return outwards journal 246
Cheques paid to suppliers 8,300
Discounts received from suppliers 749
30 Purchases ledger balances ?

Question 1.03:
Prepare a sales ledger control account from the following information:
2009 Rs.
March 1 Debit balances 12,271
Total for March:
Sales journal 9,334
Cash and cheques received from debtors 11,487
Discounts allowed 629
Debit balance in the sales ledger set of against credit 82
balance in the purchase ledger
31 Debit balance ?
Credit balance 47

Question 1.04:
Prepare a sales ledger control account from the following information for October 2006, carrying down the balance
at 31 October:
2006 Rs.
Oct 1 Sales ledger balances 28,409
31 Sales journal 26,617
Bad debts written off 342
Cheques received from debtors 24,293
 Discounts allowed 416
Cheques dishonored 1120
Returns inwards 924
Set-off against balance ion purchases ledger 319

Question 1.05:
From the following figures, compile accounts receivable ledger and accounts payable ledger control accounts for the
month, and ascertain what the net balances of the respective ledgers should be on 31 January 2010.
Balances on 1 January 2010 Rs.
Accounts receivable ledger – Dr 46,462
Cr 245
Accounts payable ledger - Dr 1,472
Cr 25,465

Total for the month to 31 January 2010 Rs.

Purchases 76,474
Sales 126,024
Purchases returns 2,154
Accounts receivable settled by contra accounts with accounts payable 455
Bad debt written off 1,253
Discounts and allowance to customers 746
Cash received from customers 120,464
Cash discount received 1,942
Cash paid to creditors cash paid to creditors 70,476
Cash paid to customers 52

Question 1.06:
Balances and transactions relating to the control accounts of Tahir Ltd. For the month of October are as follows:
Rs.
st
Balances – 1 October
Creditors control account 5,680 credit
Creditors control account 75 credit
Debtors control account 12,660 debit
Debtors control account 120 credit
Transactions for the month:
Credit sales 31,200
Discounts received 715
Credit purchases 24,900
Cheques from credit customers 21,790
Cash refund to customers 200
Bad debts written off 750
Contra settlements 2,600
Allowances to customers 450
Cash from credit customer 2,730
Allowance from supplier 660
 Sales returns 880
Discounts allowed 520
Cheques from customers dishonored 350
Payments to creditors 17,160
th
Balance 30 October:
Creditors control account 105 (debit)
Debtors control account 60 (credit)
Required:
a. Write up the creditors and debtors control accounts for the month of October and derive the closing
balance at the end of the month.
b. Explain the purpose of keeping control accounts.

Question 1.07:
The trial balance of Outsize Books Ltd revealed a difference in the books. In order that the error(s) could be located
it was decided to prepare purchases and sales ledger control accounts.
2008 Rs
Jan 1 Purchases ledger balances 19,420
Sales ledger balances 28,227
Totals for the year 2008
Purchases journal 210,416
Sales journal 305,824
Returns outwards journal 1,452
Returns inwards journal 3,618
Cheques paid to suppliers 205,419
Petty cash paid to suppliers 62
Cheques and cash received from customers 287,317
Discounts allowed 4,102
Discount received 1,721
Balance on the sales ledger set off against 640
Dec 31 The list of balances from the purchases ledger shows a total of
Rs.20,542 and that from the sales ledger a total of Rs.38,374

Question 1.08:
Rs.
Sales ledger balance, 1 July 2009 – Debit 20,040
- Credit 56
Purchases ledger balances, 1 July 2009 - debit 12
- Credit 14,860
Activities during the half year to 31 December 2009
Payments to trade accounts payable 93,685
Cheques from credit customers 119,930
Purchases on credit 95,580
Sales on credits 124,600
Bad debts written off 204
Discounts allowed 3,480
Discounts received 2,850
 Returns inwards 1,063
Return outwards 240
Sales ledger credit balances at 31 December 2009 37
Purchases ledger debit balances at 31 December 2009 26
During the half-year, debit balances in the sales ledger, amounting to Rs.438, were transferred to the purchases
ledger.

Required: Prepare the sales ledger control account and the purchases ledger control account for the half-year to 31
December 2009.

Question 1.09:
The financial year of the better Trading Company ended on 30 November 2007. You have been asked to prepare a
Total Accounts Received Account and a Total Accounts Payable Account in order to produce end-of-year figures for
Accounts Receivable and Accounts Payable for the draft final accounts.
You are able to obtain the following information for the financial year from the books of original entry:
Rs.
Sales - Cash 344,890
- Credit 268,187
Purchases – Cash 14,440
- Cash 496,600
Total receipt from customers 600,570
Total payments to suppliers 503,970
Discounts allowed (all from credit customers) 5,520
Discounts received (all from credit supplier) 3,510
Refunds given to cash customers 5,070
Balance in the sales ledger set off against balance in the purchases ledger 70
Bad debts written off 780
Increases in the allowances for doubtful debts 90
Credits notes issued to credit customers 4,140
Credit notes received from credit suppliers 1,480

According to the audited financial statements for the previous year accounts receivable and accounts payable as
at 31 December 2006 were Rs.26,555 and Rs.43,450 respectively.

Required: Draw up the relevant Total Accounts entering end of year totals for accounts receivable and accounts
payable.

Question 1.10:
Question 1.11:
 RECONCILIATION WITH SUBSIDIARY RECORDS
Question 2.01:
The Chief Accountant of Bali foods noted during the account closing for the year ended June 30, 2004
that balances as per sales ledger and receivable control accounts are not reconciled.
The following additional information is also available:
a. The total or personal accounts as per sales ledger amounted to Rs.51,208.
b. Balance of receivable control account was Rs.50,200.
c. Sales of Rs.3,400 for the month of November 2003 had been omitted from the control account.
d. A customers account balance Rs.1200 had not been included in the list of balance.
e. Cash received of Rs.3,000 entered in a personal account as 2,280.
f. Discount allowed not entered in the control account was Rs.400.
g. A personal account balance had been under cast by Rs.8000.
h. A contra item of Rs.1,600 with the purchase ledger was not entered in the control account.
i. A bad debt of Rs.2,000 was not entered in the control account.
j. Rs.1000 cash received debited to a personal account.
k. Rs.200 discount received was debited to an account in sales ledger.
l. Return inward value at Rs.800 not included in control account.
m. Cash received of Rs.320 had been credited to a personal account as Rs.32.
n. A cheque for Rs.1200 received from a customer had been dishonored by the bank but no
adjustment had been made in the control account.
Required:
a. Work out a corrected receivable control account, bringing down the amended balance
as at July 1, 2004.
b. Prepare a statement showing the adjustments that are necessary to the list of personal
accounts balances so that it reconcile with the amended receivable control account
balance.

Question 2.02:
Hina balanced her purchases ledger control account on 31 March 2014 and it showed a credit balance of
Rs.19,950. She then listed the individual suppliers balances in the purchases ledger and the total came
to Rs.18,960 at the same date.
When she examined the records, the following errors were found, and corrected:
a. Goods costing Rs.850 had been bought from north on credit, but no entries had been passed in
any of the books.
b. West had allowed cash discount Rs.20 to Hina. This had been entered on the wrong side of
wests account but entered correctly in the cash book.
c. The purchases returns day books showed that a credit note for Rs.60 had been received from
east but it had not been posted to easts account.
d. The purchases day book had been overcast by Rs.1,000.
e. South’s credit balance of Rs.90 had been omitted when the purchases ledger balances had been
listed.
Required:
a. An adjusted purchases ledger control account.
b. A statement suitably headed, showing the reconciliation of the original total of the
purchases ledger balances with the new purchases ledger control account balance.

Question 2.03:
Thee assistant accountant of Badshah limited has prepared a sales ledger control account at December
31, 1999 to reconcile the same with the list of sales ledger balances at that date. The control account
balances are.
 Debit balances Rs.226,415
Credit balances Rs.1,250
The list of balances extracted from the sales ledger totals Rs.225,575. You discover the following:
a. The credit balances have been included on the list of debtors as debit balance.
b. A sales invoice of Rs.6,400 has been recorded in the sales daybook as Rs.4,600. It has been
correctly entered in the sales ledger.
c. Cash discounts allowed amounted to Rs.840 and cash discounts received amounted to Rs.560;
the only entry in the control account for discounts is a debit for cash discount received.
d. A dishonored cheque for Rs.450 from customer has been recorded correctly in the control
account, but no entry has been made the debtors personal account.
e. A contra entry between the sales and purchase ledger of Rs. 750 has been omitted from the
Control Account.
f. A control account contains receipts from cash sales of Rs.860 but does not contain the invoices
to which these receipts refer; no entries have been made in the sales ledger for these invoices
or receipts.
g. No entries have been made in the control account for bad debts written off Rs.2,150 and
provision for doubtful debts Rs.2,400.
Required:
a. Correct the sales ledger control account.
b. Reconcile the listing of the individual balances to the revised sales ledger control account balances.
Question 2.04:
Question 2.05:
Question 2.06:

Question 2.07:
Question 2.08:
Question 2.09:
On 31 October 1999 Dawood Ltd. contained balances in his sales ledger. These balances totaled
Rs15270 but on the same date the balance of the sales ledger control account was Rs 14790. After
investigation the following errors were found.
a. Returns of Rs 80 from Saqib had not been recorded in the book.
b. Sales day book had been under cast by Rs 260.
c. A debtor balance of Rs 560 had been counted in total credit sales but had not been posted to the
customer’s account.
d. Rameez was both a customer and a supplier. His purchases ledger balance of Rs 320 has been set-
off against his sales ledger balance in the control account but nothing had been recorded in the
customer’s account.
e. A debtor account was charged with Rs 40 interest but it was not recorded in the control account.
f. Discount allowed of Rs 70 had been entered in the cash book but it is not entered in the
customer’s account.
g. Burhan returned goods worth Rs 740 but this sum was recorded as Rs 470 in his account.
h. A debt of Rs 210 had proved bad but no entry had been passed in the books.
i. Discount allowed of Rs 120 had been posted to the debit side of Saeed account.
j. Return inward journal was under cast by Rs 160.
Required
1. Write up the sales ledger control account.
2. Prepare a statement showing the reconciliation of the original total of the sales ledger balances
with the amended sales ledger control account balance.
Question 2.10: