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Difficulty: HardSales Ledger Control Account

The following transactions and balances were extracted from the accounting records of Folake Enterprises for the financial year ended 31st December 2025:

Transaction / Balance ItemAmount (₦)
Opening balance (1st Jan 2025): Debit45,000
Opening balance (1st Jan 2025): Credit1,200
Total sales (including cash sales of ₦65,000)280,000
Cash received from credit customers178,000
Cheques received from credit customers24,000
Discount allowed4,500
Returns inwards6,800
Bad debts written off3,200
Dishonoured cheques from customers2,500
Cash refunds to credit customers for overpayment1,800
Contra entry set-off with Purchases Ledger5,400
Provision for doubtful debts2,000
Discount received1,500
Closing balance (31st Dec 2025): Credit800

What is the debit balance carried down of the Sales Ledger Control Account at 31st December 2025?

Answer: 42000 ₦

Answer

The debit balance carried down of the Sales Ledger Control Account at 31st December 2025 is ₦42,000.
To calculate the closing debit balance carried down, first compute credit sales by deducting cash sales (₦65,000) from total sales (₦280,000), giving ₦215,000. Next, assemble the debit side entries: Opening debit balance (₦45,000), Credit sales (₦215,000), Dishonoured cheques (₦2,500), Cash refunds (₦1,800), and the Closing credit balance c/d (₦800), which total ₦265,100. Then assemble the credit side entries: Opening credit balance (₦1,200), Cash received (₦178,000), Cheques received (₦24,000), Discount allowed (₦4,500), Returns inwards (₦6,800), Bad debts written off (₦3,200), and Contra set-off (₦5,400), totaling ₦223,100. Subtracting ₦223,100 from ₦265,100 yields the correct closing debit balance of ₦42,000. Note that provision for doubtful debts (₦2,000) and discount received (₦1,500) are non-control account items and must be completely ignored.

Step-by-Step Solution

1
Isolate credit sales from total sales
Credit Sales = ₦280,000 - ₦65,000 = ₦215,000
Only credit sales increase trade debtors and are entered in the Sales Ledger Control Account. Cash sales are entered in the cash book.
2
Filter out non-relevant transactions
Ignore Provision for Doubtful Debts (₦2,000) and Discount Received (₦1,500)
Provision for doubtful debts is not posted to control accounts, and discount received affects creditors in the Purchases Ledger Control Account.
3
Sum all debit side items including closing credit balance
Total Debit Side = ₦45,000 + ₦215,000 + ₦2,500 + ₦1,800 + ₦800 = ₦265,100
Opening debit balance, credit sales, dishonoured cheques, cash refunds to customers, and closing credit balance increase the debit total.
4
Sum all credit side items prior to balancing
Total Credit Side = ₦1,200 + ₦178,000 + ₦24,000 + ₦4,500 + ₦6,800 + ₦3,200 + ₦5,400 = ₦223,100
Opening credit balance, cash/cheques received, discounts allowed, returns inwards, bad debts, and set-offs reduce customer indebtedness.
5
Calculate the closing debit balance carried down
Debit Balance c/d = ₦265,100 - ₦223,100 = ₦42,000
The difference between total debit entries and total credit entries gives the closing debit balance.

Key Concept

Reconstruction of Sales Ledger Control Account with extraneous items
Estimated Time:2m 0s
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Topics

Sales Ledger Control Account

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