Match each accounting transaction on the left with its corresponding entry placement and accounting effect in the Purchases Ledger Control Account on the right.
- Discount received from credit suppliersDebited to Purchases Ledger Control Account to reduce supplier liability upon prompt payment
- Credit purchases during the accounting periodCredited to Purchases Ledger Control Account as the primary entry increasing total accounts payable
- Interest charged by suppliers on overdue accountsCredited to Purchases Ledger Control Account to record an additional charge increasing total amount owed
- Set-off (contra entry) with the Sales Ledger Control AccountDebited to Purchases Ledger Control Account to adjust for mutual balances settled between ledgers
Answer
Discount received corresponds to debiting the control account to reduce supplier liability; Credit purchases correspond to crediting the control account as the primary increase in accounts payable; Interest charged by suppliers corresponds to crediting the control account as an additional liability charge; Set-off (contra entry) corresponds to debiting the control account to adjust for mutual balances.
Transactions that increase liabilities owed to suppliers (such as credit purchases and overdue interest charged) are credited to the Purchases Ledger Control Account. Conversely, transactions that decrease liabilities owed to suppliers (such as discount received and set-off contra entries) are debited to the control account.
Step-by-Step Solution
Key Concept
Purchases Ledger Control Account Debit and Credit Posting Rules
Estimated Time:1m 30s