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Difficulty: MediumControl Account Error Corrections and Ledger Reconciliation

The Sales Ledger Control Account of Chidubem Trading Enterprise showed a debit balance of ₦320,000\text{₦}320,000 before ledger reconciliation. An investigation of the accounting records revealed the following errors:
1. Sales returns journal total of ₦8,500\text{₦}8,500 was debited to the Sales Ledger Control Account.
2. Discount allowed amounting to ₦4,500\text{₦}4,500 was omitted entirely from the Sales Ledger Control Account.
3. A credit sale of ₦12,000\text{₦}12,000 was posted to the credit side of the Sales Ledger Control Account.

What is the corrected balance of the Sales Ledger Control Account after making the necessary adjustments?

  1. ₦322,500Answer
  2. B
    ₦336,000
  3. C
    ₦331,500
  4. D
    ₦319,000

Answer

₦322,500
The unadjusted debit balance of ₦320,000 must be adjusted for all three errors. Sales returns debited instead of credited require a credit adjustment of 2×₦8,500=₦17,0002 \times \text{₦}8,500 = \text{₦}17,000. Omitted discount allowed requires a credit adjustment of ₦4,500. A credit sale credited instead of debited requires a debit adjustment of 2×₦12,000=₦24,0002 \times \text{₦}12,000 = \text{₦}24,000. Performing the net calculation: ₦320,000−₦17,000−₦4,500+₦24,000=₦322,500\text{₦}320,000 - \text{₦}17,000 - \text{₦}4,500 + \text{₦}24,000 = \text{₦}322,500.

Step-by-Step Solution

1
Calculate the adjustment for misplaced sales returns.
Credit adjustment of ₦17,000
Sales returns reduce debtors (credit side). Debiting ₦8,500 requires a credit of ₦17,000 (₦8,500 to cancel the error plus ₦8,500 for correct entry).
2
Calculate the adjustment for omitted discount allowed.
Credit adjustment of ₦4,500
Discount allowed reduces total debtors and must be credited to the Sales Ledger Control Account.
3
Calculate the adjustment for misplaced credit sale.
Debit adjustment of ₦24,000
Credit sales increase debtors (debit side). Crediting ₦12,000 requires a debit of ₦24,000 (₦12,000 to cancel the error plus ₦12,000 for correct entry).
4
Compute the corrected balance.
₦320,000 - ₦17,000 - ₦4,500 + ₦24,000 = ₦322,500
Apply all debit and credit corrections to the unadjusted debit balance.

Key Concept

Sales Ledger Control Account Error Correction
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Topics

Control Account Error Corrections and Ledger Reconciliation

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