- 15 Marks
FA – L1 – Q49 – Control accounts and account reconciliations
Question
Sahara Health Ltd has an accounting system where all separate ledger accounts are maintained for each individual customer and supplier.
The management wishes to draft the related control accounts.
The following information is available:
| Description | GH₵ |
|---|---|
| Receivables as on December 31, 20X8 | 32,000,000 |
| Payables as on December 31, 20X8 | 23,350,000 |
| Cheques issued to suppliers in settlement | 14,360,000 |
| Cash sales memos issued | 550,000 |
| Goods returned to suppliers | 180,000 |
| Cheques received from receivables in settlement | 31,650,000 |
| Cheque received from suppliers against return of goods | 120,000 |
| Credit sales invoices issued | 35,900,000 |
| Returns by customers: from cash sales | 320,000 |
| Returns by customers: from credit sales | 980,000 |
| Goods purchased on credit | 27,700,000 |
| Cash refund to a debtor who had paid the amount due twice | 200,000 |
| Cheque issued by a debtor on Dec. 28, 20X8 was dishonoured on May 13, 20X9 | 500,000 |
| Increase in allowance for receivables (from GH₵1,750,000 to GH₵2,250,000) | 500,000 |
| Irrecoverable debts written off | 430,000 |
| Contra settlement between payables and receivables accounts | 1,660,000 |
| Credit balances included in customers’ accounts as on December 31, 20X9 | 75,000 |
| A supplier’s invoice received on December 30, 20X9 relating to goods supplied on December 28, 20X9 has not been entered in the books | 350,000 |
Required
Prepare the receivables and payables control accounts from the above information for the year ended December 31, 20X9.
Answer
Receivables Control Account
| Dr. | GH₵ | Cr. | GH₵ |
|---|---|---|---|
| Balance b/d (01.01.20X9) | 32,000,000 | Cheques received | 31,650,000 |
| Credit sales | 35,900,000 | Returns by customers (credit sales) | 980,000 |
| Dishonoured cheque | 500,000 | Cash refund | 200,000 |
| Irrecoverable debts | 430,000 | ||
| Contra settlement | 1,660,000 | ||
| Increase in allowance for receivables | 500,000 | ||
| Balance c/d (31.12.20X9) | 33,077,000 | ||
| Total | 68,400,000 | Total | 68,400,000 |
Payables Control Account
| Dr. | GH₵ | Cr. | GH₵ |
|---|---|---|---|
| Cheques issued | 14,360,000 | Balance b/d (01.01.20X9) | 23,350,000 |
| Goods returned to suppliers | 180,000 | Goods purchased on credit | 27,700,000 |
| Cheque received from suppliers | 120,000 | Supplier’s invoice (not entered) | 350,000 |
| Contra settlement | 1,660,000 | ||
| Balance c/d (31.12.20X9) | 35,080,000 | ||
| Total | 51,400,000 | Total | 51,400,000 |
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