Question

The following data were taken from the books of Powell Construction Ltd:

2020					$
Aug		01	Debit balance as per Sales Ledger		44 000
			Credit balance as per Sales Ledger		760
			Credit balance as per Purchases Ledger		24 440
			Debit balance as per Purchases Ledger		450
2020
Aug.		31	Total credit purchases		248 000
			Total cash purchases		13 000
			Total credit sales		329 600
			Total cash sales		36 000
			Returns inwards		2 345
			Returns outwards		3 450
			Discounts received		3 200
			Discounts allowed		2 400
			Bad debts		4 350
			Bad debts recovered		1 500
			Cash and cheques received, including bad debts recovered		321 000
			Cash and cheques paid to suppliers		246 400
			Interest charged to debtors		875
			Increase in provision for bad debts		789
			Transfer from Purchases Ledger to Sales Ledger		1 765
			Credit balance in Sales Ledger on 31 Aug. 2020		1 680
			Debit balance in Purchases Ledger on 31 Aug 2020		1 380

           

REQUIRED:

Prepare in the general ledger of Powell Construction Ltd for the month of August 2020:

a.       the Sales Ledger Control Account            (15 marks)

b.      Purchases Ledger Control Account            

Total 25 marks

Answer 1

SOLUTION:

Sales Ledger Control Account

Particulars	Debit	Particulars	Credit
Opening balance	44000	Opening balance	760
Credit Sales	329600	Sales return (Return inwards)	2345
Interest charged to debtors	875	Discounts allowed	2400
		Cash & Cheques received	321000
		Bad debts	4350
		Transfer from purchase ledger	1765
		Balance carried forward	41855
	374475		374475

NOTE:

BALANCE OF 41855 COMPRISES THE EFFECT OF CR BALANCE OF 1680 ALSO

Purchase Ledger Control Account

Particulars	Debit	Particulars	Credit
Opening balance	450	Opening balance	24440
Purchase return (Return Outwards)	3450	Credit Purchases	248000
Discounts received	3200
Bank a/c (Cash & Cheques paid to suppliers)	246400
Transfer to sales ledger	1765
Balance carried forward	17175
	272440		272440

NOTE:

BALANCE OF 17175 COMPRISES THE EFFECT OF DR BALANCE OF 1380 ALSO

NOTE: CASH SALE, CASH PURCHASE, BAD DEBTS RECOVERED ARE NOT CONCERNED WITH ABOVE.

THESE ARE ACCOUNTED FOR DIRECTLY IN CASH/BANK BOOK. CONTRA ENTRY EFFECTS HAS NOT

BEEN GIVEN ABOVE.