Question

Difficulty: MediumControl Account Error Corrections and Ledger Reconciliation

Prior to reconciliation, the Sales Ledger Control Account of Zainab Enterprises showed a debit balance of ₦420,000\text{₦}420,000. It was later discovered that a sales return of ₦18,000\text{₦}18,000 was erroneously posted to the debit side of the control account, and the discount allowed total of ₦14,000\text{₦}14,000 from the cash book was omitted from the control account. What is the correct adjusted balance of the Sales Ledger Control Account?

  1. ₦370,000\text{₦}370,000Answer
  2. B
    ₦388,000\text{₦}388,000
  3. C
    ₦398,000\text{₦}398,000
  4. D
    ₦424,000\text{₦}424,000

Answer

The correct adjusted balance of the Sales Ledger Control Account is ₦370,000\text{₦}370,000.
The unadjusted debit balance is ₦420,000\text{₦}420,000. A sales return posted to the debit side requires a double adjustment of ₦36,000\text{₦}36,000 (2×₦18,0002 \times \text{₦}18,000) on the credit side to cancel the error and record the return. Additionally, discount allowed reduces debtors, so the omitted total of ₦14,000\text{₦}14,000 must also be credited. Subtracting ₦36,000\text{₦}36,000 and ₦14,000\text{₦}14,000 from ₦420,000\text{₦}420,000 gives the corrected debit balance of ₦370,000\text{₦}370,000.

Step-by-Step Solution

1
Calculate the adjustment for the sales return posted to the wrong side
Deduct ₦36,000\text{₦}36,000 (2×₦18,0002 \times \text{₦}18,000)
Posting a sales return to the debit side increases debtors instead of reducing them. To correct this, we must remove the incorrect debit of ₦18,000\text{₦}18,000 and record the correct credit of ₦18,000\text{₦}18,000, resulting in a net deduction of ₦36,000\text{₦}36,000.
2
Calculate the adjustment for the omitted discount allowed
Deduct ₦14,000\text{₦}14,000
Discount allowed reduces the total amount owed by debtors and must be credited to the Sales Ledger Control Account.
3
Compute the adjusted balance
₦420,000−₦36,000−₦14,000=₦370,000\text{₦}420,000 - \text{₦}36,000 - \text{₦}14,000 = \text{₦}370,000
Apply both adjustments to the initial debit balance to obtain the corrected figure.

Key Concept

Correcting errors of commission and omission in the Sales Ledger Control Account
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