Control Account

The following balances were extracted from the books of Argost Ltd on 1 October 2006:
Dr Cr
£ £
Purchases Ledger 900 41,489
Sales Ledger 62,185 140
The Allowance for Doubtful Debts at 1 October 2006 was £850.

In the month of October 2006, the following transactions took place:

Sales on credit £ 68,500
Discounts received 500
Cash sales 18,129
Credit purchases 44,655
Discounts allowed 1,800
Bad debts written off 400
Returns inwards from credit customers 825
Returns outwards to credit suppliers 1,270
Payments to credit suppliers 39,300
Receipts from credit customers 64,003
Legal fees for debt collection charged to customer’s account 150
Debtor's cheque dishonoured 800
Cash purchases 4,770
Debit balance on Sales Ledger transferred to Purchase Ledger per contra 1,200
Bill of Exchange issued by a creditor and accepted by Argost Ltd 504

At 31 October 2006, the following information was available:

Sales Ledger credit balances £ 250
Purchase Ledger debit balances 700

Allowance for Doubtful Debts was to be adjusted to 2% of debtors at 31 October 2006

REQUIRED
For Argost Ltd:
(a) Prepare the Sales Ledger Control account for the month of October 2006
(b) Prepare the Purchase Ledger Control account for the month of October,2006.
(c) Give two possible reasons for the credit balance of £250 on the Sales Ledger Control account at
31 October 2006.

Answer Guide: (a) £63,517 (Dr.) (b) £43,170 (Cr.)