The total of the purchase journal has been posted to the creditors control account as Rs. 603,000.00.
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.
Creditor Ledger balance of XYZ business as at 01.03.2014 are as follows;
|
Creditor Name |
Value (Rs.) |
|
Asitha |
25,000.00 |
|
Visitha |
44,000.00 |
|
Lasith |
12,000.00 |
|
Total |
81,000.00 |
The summary of the transaction done with the creditors during the month of March 2014 is given below;
|
Creditor |
Purchases (Rs.) |
Purchases Return (Rs.) |
Payment (Rs.) |
Discount Received (Rs.) |
|
Asitha |
160,000.00 |
- |
130,000.00 |
6,000.00 |
|
Visitha |
300,000.00 |
4,000.00 |
300,000.00 |
- |
|
Lasitha |
120,000.00 |
- |
120,000.00 |
2,000.00 |
|
Rakitha |
50,000.00 |
- |
16,000.00 |
- |
|
Total |
630,000.00 |
4,000.00 |
566,000.00 |
8,000.00 |
As at 01.03.2014 the total of the creditors ledger balance agreed with the balance of the creditor control account. As at 31.03.2014 the total of the creditors ledger balance did not agree with the balance of the creditors control account. The reasons for this difference are given Below;
- Discount received from Asitha for Rs. 3,000.00 have been debited to creditors control account and credited to discount received account. No other entries had been made in this regard.
- Debited note of Rs. 4,000.00 sent to Visitha has not been recorded in his account.
- Cash ssales of Rs. 20,000.00 have been credited to creditors control account.
- Purchase invoice dated 28.03.2014 raised for goods purchased of Rs.12,000.00 from Muditha. Has not been recorded in the purchase journal.
- The total of the purchase journal has been posted to the creditors control account as Rs. 603,000.00.
Requirement
Explain the process taken to reconcile control accounts and provide relevant control accounts with
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