Accounting Test Question No.CO 2 On Control Accounts

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 31st 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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