Control Account and Control Account Reconciliation

1. In a payables control account reconciliation, the balance on the payables ledger control account differs from the total of individual supplier balances in the payables ledger. Which of the following errors would cause this difference?

2. The balance on Kwabena’s receivables ledger control account on 31 December was GH¢3,800,000, which did not agree with the net total of the list of receivables ledger balances at that date. The following errors were found:

(a) Debit balances in the receivables ledger, amounting to GH¢103,000, had been omitted from the list of balances;

(b) A bad debt amounting to GH¢400,000 had been written off in the receivables ledger but had not been posted to the bad debts expense account or entered in the control account;

(c) An item of goods sold to Araba, GH¢250,000, had been entered once in the sales day book but posted to her account twice;

(d) Kwabena had expected Nyamekye to take advantage of a settlement discount of GH¢25,000, but Nyamekye did not settle the account in time to qualify for the discount—this has been recorded correctly in Nyamekye’s own account but not entered in the general ledger;

(e) No entry had been made in the control account in respect of the transfer of a debit of GH¢70,000 from Monday’s account in the receivables ledger to his account in the payables ledger;

(f) The discount allowed column in the cash account had been undercast by GH¢140,000.

After making the necessary adjustments, what is the corrected balance on the receivables control account?

3. Tang received a statement of account from a supplier Duong, showing a balance to be paid of GH¢5,900. Tang’s payables ledger account for Duong shows a balance due to Duong of GH¢3,360. Investigation reveals the following:

(1) Cash paid to Duong GH¢1,650 has not been allowed for by Duong;

(2) Sales returned to Duong GH¢780 have not been allowed for by Duong;

(3) Tang’s ledger account for Duong has not been adjusted for GH¢110 of cash discount disallowed by Duong.

After reconciliation, what is the corrected balance that should be shown in Tang’s payables ledger for Duong? 

4. The balance on the receivables ledger control account in the general ledger of Entity Z is GH¢53,690. The balances on the customer accounts in the receivables ledger are: Customer A GH¢12,000; Customer B GH¢8,000; Customer C GH¢6,000; Customer D GH¢11,000; Customer E GH¢15,000, totaling GH¢52,000. An investigation reveals:

(1) A sale on credit of GH¢1,700 to Customer A has not been recorded in the customer’s account in the receivables ledger, but is included in the control account balance;

(2) Customer B has supplied goods to Entity Z to the value of GH¢400, and these have not yet been paid for by Entity Z—it has been agreed that this amount should be offset against the money owed to Entity Z by Customer B, but no entries have yet been made for this ‘contra’ adjustment in the general ledger or the receivables and payables ledgers;

(3) Sales returns of GH¢550 by Customer C have been recorded in C’s individual account in the receivables ledger, but the transaction was not posted to the general ledger;

(4) Customer D took advantage of an early settlement discount saving GH¢240—Entity Z had not expected Customer D to take the discount—this has been recorded in D’s individual account in the receivables ledger, but the transaction was not posted to the general ledger;

(5) Sales returns of GH¢800 by Customer E have not been recorded in the customer’s account in the receivables ledger, but are included in the control account balance. After all corrections, what is the reconciled balance? 

5. The balance on the payables control account was GH¢971,860 as at 31 December. Balances extracted from the payables ledger on this date totalled GH¢962,380. Investigations reveal:

(1) The purchases day book was undercast by GH¢60,000;

(2) A cash account total of GH¢108,580 was posted to the control account as GH¢90,580;

(3) A credit balance of GH¢13,860 on the suppliers’ ledger had been set off against a customer’s ledger debit balance but no entry had been made in the control accounts;

(4) A credit balance of GH¢37,620 had been omitted from the list of balances.

After corrections, what is the reconciled balance? 

6. What is the primary purpose of a receivables control account in a double-entry accounting system? 

7. In a receivables control account, which of the following items would appear as a credit entry? 

The balance on Entity Z’s receivables ledger control account is GH¢53,690, while the total of individual customer balances in the receivables ledger is GH¢52,000. Investigations reveal:

a sale of GH¢1,700 to Customer A not recorded in the customer’s account but included in the control account; a contra entry of GH¢400 for Customer B not recorded in either ledger; sales returns of GH¢550 by Customer C recorded in the individual account but not in the general ledger;

a discount of GH¢240 taken by Customer D recorded in the individual account but not in the general ledger;

and sales returns of GH¢800 by Customer E not recorded in the customer’s account but included in the control account.

After corrections, what is the reconciled balance? 

9. Which of the following errors would cause the balance on the payables control account to differ from the total of individual supplier balances in the payables ledger?

Tang received a statement from supplier Duong showing a balance of GH¢5,900, while Tang’s payables ledger shows GH¢3,360. Investigations reveal:

cash paid to Duong of GH¢1,650 not allowed for by Duong;

sales returns to Duong of GH¢780 not allowed for by Duong;

and Tang’s ledger not adjusted for GH¢110 of cash discount disallowed by Duong.

After reconciliation, what is the corrected balance? 

11. The balance on the receivables ledger control account is $45,000, while the total of individual customer balances in the receivables ledger is $42,500. Investigations reveal the following errors:

(i) Credit sales of $2,000 were correctly posted to the control account but omitted from one customer’s individual account;

(ii) A contra entry of $500 was recorded in the control account but not in the receivables ledger;

(iii) Bad debts of $1,200 were written off in the individual accounts but not posted to the control account;

(iv) Sales returns of $800 were posted to the control account but double-posted to a customer’s individual account;

(v) A settlement discount of $300, not expected to be taken, was recorded in the control account as a revenue adjustment but omitted from the individual account.

After all necessary corrections, what is the reconciled balance?

12. In a payables control account reconciliation, the control account balance is £98,000 credit, and the total of supplier balances in the payables ledger is £95,000 credit. Errors identified include:

(i) Purchases day book undercast by £4,000;

(ii) Cash payments totaling £12,000 posted as £10,000 to the control account;

(iii) A contra entry of £1,500 set off against a receivable but not entered in the control account;

(iv) Purchase returns of £2,500 recorded in individual accounts but not in the control account;

(v) A supplier balance of £3,000 omitted from the list of balances. After corrections, what is the reconciled balance?

13. A company received a supplier statement showing a balance owed of €6,200. The company’s payables ledger account for the supplier shows €4,100. Investigations reveal:

(i) A payment of €1,500 not recorded by the supplier;

(ii) Purchase returns of €900 not credited by the supplier;

(iii) The company omitted a purchase invoice of €800 from its ledger;

(iv) A discount received of €200 was disallowed by the supplier but not adjusted in the company’s ledger;

(v) A contra entry of €400 was recorded by the company but not by the supplier. After reconciliation and corrections, what is the correct balance in the company’s payables ledger for this supplier?

14. The following information relates to a company’s receivables ledger control account for the month: Opening balance $50,000; Credit sales $120,000; Cash received $100,000; Sales returns $5,000; Bad debts written off $3,000; Contra entries $2,000; Settlement discounts allowed $1,500. However, upon reconciliation, the total individual balances are $58,000, and errors include:

(i) Sales day book overcast by $4,000;

(ii) A bad debt of $1,000 posted to control but not to individual;

(iii) Discounts of $500 double-posted to individuals. What is the correct closing balance on the receivables control account after corrections? 

Based on a review of control account practices, which of the following combinations of errors would not be detected solely by a trial balance but would be identified through a control account reconciliation process?

(i) A credit sale posted to the control account but omitted from the individual customer account;

(ii) A contra entry recorded in the individual ledger but not in the control account;

(iii) Bad debts written off in the control account but double-posted to the individual account;

(iv) Sales returns undercast in the day book, affecting the control account but not individuals. 

16. When reconciling the payables ledger control account with the list of payables ledger balances of M, the following errors were found: the purchase day book had been overstated by ₦500 and the personal ledger of a supplier had been understated by ₦400. What adjustment must be made to correct these errors? 

Which of the following is NOT the purpose of a sales ledger control account?

18. The balance on the payables control account is £10,807, and the total list of supplier balances is £10,000. Investigations reveal a contra entry of £807 was recorded in the individual supplier accounts but not posted to the control account. After correction, both the control account balance and the list of balances should be: 

19. The balance on Kwabena’s receivables ledger control account on 31 December was GH¢3,800,000, which did not agree with the net total of the list of receivables ledger balances at that date. The following errors were found:

(a) Debit balances amounting to GH¢103,000 omitted from the list;

(b) Bad debt of GH¢400,000 written off in the receivables ledger but not posted to bad debts expense or control account;

(c) Goods sold to Araba GH¢250,000 entered once in sales day book but posted twice to her account;

(d) Expected settlement discount of GH¢25,000 for Nyamekye not taken, recorded in her account but not in general ledger;

(e) No entry in control account for transfer of GH¢70,000 debit from Monday’s receivables account to payables ledger;

(f) Discount allowed column in cash account undercast by GH¢140,000. Additionally, suppose an extra error: a sales return of GH¢50,000 was posted to the control account but omitted from the individual account.

After all adjustments, what is the corrected balance on the receivables control account?

20. The balance on the receivables ledger control account is $45,000, while the total of individual customer balances is $43,200. Investigations reveal:

(i) Credit sales of $2,000 correctly posted to control but omitted from one customer’s account;

(ii) A contra entry of $500 recorded in control but not in receivables ledger;

(iii) Bad debts of $1,200 written off in individual accounts but not in control;

(iv) Sales returns of $800 posted to control but double-posted to customer’s account;

(v) Settlement discount of $300 not expected, recorded as revenue adjustment in control but omitted from individual account;

(vi) An additional transposition error in a customer balance where $450 was recorded as $540 (difference $90). After all corrections, what is the reconciled balance? 

21. The payables ledger control account of a company shows a balance of $12,500 credit, while the total of individual supplier balances is $11,800 credit. Investigations reveal:

(i) A purchase invoice of $400 was posted to the control account but omitted from the supplier’s individual account;

(ii) A contra entry of $300 was recorded in the individual ledger but not in the control account;

(iii) Cash payments of $1,200 were undercast by $100 in the cash book, affecting the control account posting;

(iv) Purchase returns of $500 were double-posted to the control account;

(v) A supplier’s credit balance of $200 was transposed as $020 in the list of balances. After all corrections, what is the reconciled balance? 

22. In a sales ledger control account reconciliation, the control account balance is £28,000 debit, and the sum of customer balances is £27,200 debit. Errors include:

(i) Sales of £1,500 posted to control but transposed as £5,100 in a customer’s account (difference £3,600);

(ii) A bad debt of £800 written off in control but not in the individual account;

(iii) Discounts allowed totaling £400 undercast in the cash book by £100, posted correctly to individuals;

(iv) A contra of £600 recorded in both but reversed in the individual ledger;

(v) Sales returns of £300 omitted from control but posted to the customer account. After corrections, what is the reconciled balance?

23. A company’s receivables control account balances at €45,000, while the list totals €43,500. Identified issues:

(i) Credit sales €2,000 day book total posted to control, but one €500 invoice omitted from individual;

(ii) Cash received €1,500 posted to control as €5,100 (transposition error);

(iii) Bad debts €800 written off in individuals but posted twice to control;

(iv) Contra €400 not recorded in control but in list;

(v) Settlement discount €300 expected but not taken, adjusted in list but not control. What is the corrected control account balance after reconciliation? 

24. The balance on the purchases ledger control account is $97,000 credit, list of balances $95,500 credit. Errors:

(i) Purchases day book overcast by $1,000;

(ii) Cash paid $10,000 posted to control but $1,000 omitted from a supplier account;

(iii) Purchase returns $2,000 recorded in control but transposed as $200 in list (difference $1,800);

(iv) Contra $500 recorded in list twice;

(v) A credit balance $800 omitted from list. After all adjustments, what is the reconciled balance?

25. Rush Co has a credit balance of £54 in Jack Co’s receivables ledger account. Which of the following could explain this balance? 

26. The following purchases ledger control account contains errors: Opening balance $5,000 credit; Purchases $20,000; Cash paid $15,000; Discounts received $500; Returns $1,000; Contra $800. However, purchases were undercast by $2,000, cash paid transposed as $51,000 (actual $15,000), discounts omitted from individuals, returns double-posted to control. What is the correct closing balance? 

27. Steven’s receivables ledger control account does not agree with the total of the receivables ledger. The control is £35,000 debit, list £34,200 debit. Errors: Sales day book undercast £800; A receipt £1,000 posted to wrong individual account; Bad debt £600 written off in control only; Contra £400 in list only; Discount £200 not allowed, adjusted in control but not list. After corrections, the reconciled total is: 

28. In a payables reconciliation, both the control account balance and the list balances should be reduced by £807 due to a contra entry recorded in individual supplier accounts but not posted to the control account. If original control is £10,807 credit and list £10,000 credit, after correction, the balances are: 

29. A company has prepared draft accounts, and the payables control account shows $3,250. But errors include: a purchase invoice $400 omitted from control but in list; cash paid $1,200 posted twice to control; returns $500 in list only. What is the correct balance?

30. The trial balance of a company does not balance due to errors in control accounts. Receivables control £40,000, but list £38,500. Errors: Sales overcast £1,000; Receipt £2,000 omitted from control; Bad debt £800 in list twice; Contra £500 in control only; Discount £300 disallowed, in list but not control. The corrected receivables balance for financial statements is: