April showers sells goods on credt to most of its customers. In order to control its debtor collection syster the company maintains a sales ledger control account. In preparing the accounts for the year to 31 Octobe 2019 the accountant dscovers that the total of all the personal accounts in the sales ledger amounts to shl 802, whereas the balance on the sales ledger control account is sh12,550. Upon investigating the matter, the following errors were discovered: 1. Sales for the week ending 27 March 2019 armounting to sh850 had been omitted from the control accou t. 2. A debtor's account balance of sh300 had not been included in the list of balances. 8. Cash received of sh 750 had been entered in a personal account as sh510. 4. Discounts allowed totaling sh100 had not been entered in the control account. & A personal account balance had been undercast by sh200. & A contra iterm of sh400 with the purchase ledger had not been entered in the control account. 7. A bad debt of sh500 had not been entered in the control account. 8. Cash received of sh250 had been debited to a personal account. 9. Discounts received of sh50 bad been debited to Bell's sales ledger account. 10. Retums inwards valued at sh200 had not been included in the control account. 11. Cash received of sh80 had been credted to a personal account as sh8. 12. A cheque for sh300 received from a custormer had been dishorored by the bank, but ŋ0 adjustrment bad en made in the control account. Required: Prepare a corrected sales ledger control account, bringing down the amended balance as at 1 November 2019.
April showers sells goods on credt to most of its customers. In order to control its debtor collection syster the company maintains a sales ledger control account. In preparing the accounts for the year to 31 Octobe 2019 the accountant dscovers that the total of all the personal accounts in the sales ledger amounts to shl 802, whereas the balance on the sales ledger control account is sh12,550. Upon investigating the matter, the following errors were discovered: 1. Sales for the week ending 27 March 2019 armounting to sh850 had been omitted from the control accou t. 2. A debtor's account balance of sh300 had not been included in the list of balances. 8. Cash received of sh 750 had been entered in a personal account as sh510. 4. Discounts allowed totaling sh100 had not been entered in the control account. & A personal account balance had been undercast by sh200. & A contra iterm of sh400 with the purchase ledger had not been entered in the control account. 7. A bad debt of sh500 had not been entered in the control account. 8. Cash received of sh250 had been debited to a personal account. 9. Discounts received of sh50 bad been debited to Bell's sales ledger account. 10. Retums inwards valued at sh200 had not been included in the control account. 11. Cash received of sh80 had been credted to a personal account as sh8. 12. A cheque for sh300 received from a custormer had been dishorored by the bank, but ŋ0 adjustrment bad en made in the control account. Required: Prepare a corrected sales ledger control account, bringing down the amended balance as at 1 November 2019.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question
Transcribed Image Text:April showers sells goods on credit to most of its customers. In order to control its debtor collection system,
the company maintaiņs a sales ledger control account. In preparing the accounts for the year to 31 October
2019 the accountant discovers that the total of all the personal accounts in the sales ledger amounts to sh12,
802, whereas the balance on the sales ledger control account is sh12,550.
Upon investigating the matter, the following errors were discovered:
1. Sales for the week ending 27 March 2019 amounting to sh850 had been omitted from the control accoun
t.
2. A debtor's account balance of sh300 had not been included in the list of balances.
&. Cash received of sh 750 had been entered in a personal account as sh570.
4. Discounts allowed totaling sh100 had not been entered in the control account.
5. A personal account balance had been undercast by sh200.
a. A contra item of sh400 with the purchase ledger had not been entered in the control account.
1. A bad debt of sh500 had not been entered in the control account.
8. Cash received of sh250 had been debited to a personal account.
9. Discounts received of sh50 had been debited to Bell's sales ledger account.
10. Retums inwards valued at sh200 had not been included in the control account.
11. Cash received of sh80 had been credited to a personal account as sh8.
12. A cheque for sh300 recelved from a customer had been dishonored by the bank, but no adjustment had be
en made in the control account.
Required:
Prepare a corrected sales ledger control account, bringing down the amended balance as at 1 Novermber 2019.
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