Accounting Test Question No.CO 2 On Control Accounts

September 22nd, 2008 Comments off
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Another example of accounting question on Control Accounts:

Accounting Question Test CO No.2 On Control Accounts

Question:

Jim keeps control accounts for his Purchases and Sales Ledgers. He extracted the following balances from her books of accounts for the month of July 2008:

 

 

 

 

1st July

Purchase Ledger balance

Dr $186

 

 

 

Cr $17,960

 

 

Sales Ledger balance

Dr $28,240

 

 

 

Cr $235

 

31st July

Purchase on credit

 

$49,216

 

Cash purchases

 

$4,820

 

Sales on credit

 

$63,140

 

Cash sales

 

$6,280

 

Bad debts written off

 

$190

 

Returns outwards

 

$1024

 

Returns inwards

 

$1,642

 

Cash received from credit customers

 

$67,930

 

Discount received

 

$1,045

 

Dishonored cheque recharged to credit customer

 

$315

 

Legal fees charged to customers

 

$150

 

Payments to suppliers

 

$47,310

 

Discount allowed

 

$1,820

 

Sales ledger debit balances transferred to purchases ledger per contra

 

$450

 

Purchase ledger debit balances at 31st July

 

$212

 

Sales ledger credit balance at 31st July

 

$287

 

Provision for bad and doubtful debts

 

$320

Required:

(a)           Open the Purchases Ledger and Sales Ledger Control Accounts and post the entries for the month of July 2008,balancing at 31 st July (20 marks)

(b)           Show how the Debtors and Creditors should appear in the Balance Sheet as at 31 st July 2008 (5 marks)

(c)           Jim intends to divide its sales ( ie Debtors) Ledger into six parts according to sales areas and to keep a Control Account for each part. State one advantage that Jim might obtain from keeping such Control Account

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