Question Tag: Ledger Reconciliation

The trial balance of CLAVELL ENTERPRISES includes the following items:

The following information is available:

(i) The total of debit balances in the receivables ledger account is N116,374 and the total of credit balances is N1,234.

(ii) The total of credit balances in the payables ledger account is N80,412 and the total of debit balances is N1,111.

(iii) The receivables ledger account includes a debit balance of N700 for Entity C, and the accounts payable ledger includes a credit balance of N800 relating to Entity C. Only the net amount will eventually be paid.

(iv) Included in the credit balances in the receivables ledger account is a balance of N600 in the name of P Quinn. This arose because a sales invoice for N600 had earlier been posted in error from the sales day book to the debit of the account of M Quinn in the accounts payable ledger.

(v) An allowance of N300 granted to a customer for some damaged goods had been omitted from the appropriate account in the receivables ledger account. This allowance had been included in the receivables ledger control account.

(vi) An invoice for N456 had been entered in the purchases day book as N654.

(vii) A cash receipt from a credit customer for N345 had been entered in the cash book as N245.

(viii) The purchases day book had been overcast by N1,000.

(ix) The bank balance of N1,700 had been included in the trial balance, in error, as an overdraft.

(x) The debit balance on the insurance account in the nominal ledger of N3,456 has been included in the trial balance as N3,546.

Required:

a. Prepare a reconciliation of the receivable ledger control account and the receivables ledger balances. (8 Marks)

b. Open a suspense account and post the entries required to clear this account. (4 Marks)

c. Reconcile the payables ledger control account and the payables ledger balances. (8 Marks)