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Difficulty: HardSales Ledger Control Account

The following information was extracted from the accounting records of Kalu & Sons for the year ended 31 December 2025:

- Opening balances at 1 January 2025: Debit balance ₦45,000₦45,000, Credit balance ₦1,200₦1,200
- Total sales (including cash sales of ₦70,000₦70,000): ₦320,000₦320,000
- Cash and cheques received from customers: ₦210,000₦210,000
- Discount allowed to customers: ₦4,500₦4,500
- Cheques received from customers dishonoured: ₦3,800₦3,800
- Bad debts written off: ₦2,200₦2,200
- Provision for doubtful debts: ₦5,000₦5,000
- Cash refunded to a customer for overpayment: ₦1,500₦1,500
- Set-off against balance in purchases ledger: ₦6,000₦6,000
- Closing credit balance at 31 December 2025: ₦800₦800

What is the closing debit balance of the Sales Ledger Control Account at 31 December 2025?

  1. ₦77,200Answer
  2. B
    ₦72,200
  3. C
    ₦86,200
  4. D
    ₦147,200

Answer

₦77,200
The closing debit balance of ₦77,200 is derived by correctly identifying debit items (Opening Debit Balance of ₦45,000, Credit Sales of ₦250,000, Dishonoured Cheques of ₦3,800, Cash Refund of ₦1,500, and Closing Credit Balance of ₦800) and subtracting credit items (Opening Credit Balance of ₦1,200, Cash/Cheques Received of ₦210,000, Discount Allowed of ₦4,500, Bad Debts Written Off of ₦2,200, and Purchases Ledger Set-off of ₦6,000). Provision for doubtful debts is intentionally excluded as it does not form part of control accounts.

Step-by-Step Solution

1
Calculate credit sales for the period
Credit Sales = Total Sales - Cash Sales = ₦320,000−₦70,000=₦250,000₦320,000 - ₦70,000 = ₦250,000
Only credit sales increase trade receivables; cash sales do not enter the sales ledger control account.
2
Sum all debit entries in the Sales Ledger Control Account
Total Debits = Opening Debit Balance (₦45,000₦45,000) + Credit Sales (₦250,000₦250,000) + Dishonoured Cheques (₦3,800₦3,800) + Cash Refund to Customer (₦1,500₦1,500) + Closing Credit Balance (₦800₦800) = ₦301,100₦301,100
Debit entries represent items that increase the receivables balance or represent closing credit balances.
3
Sum all credit entries in the Sales Ledger Control Account
Total Credits = Opening Credit Balance (₦1,200₦1,200) + Cash/Cheques Received (₦210,000₦210,000) + Discount Allowed (₦4,500₦4,500) + Bad Debts Written Off (₦2,200₦2,200) + Set-off/Contra (₦6,000₦6,000) = ₦223,900₦223,900
Credit entries represent items that decrease the receivables balance or represent opening credit balances. Note that provision for doubtful debts is excluded.
4
Deduct total credits from total debits to obtain the closing debit balance
Closing Debit Balance = ₦301,100−₦223,900=₦77,200₦301,100 - ₦223,900 = ₦77,200
The difference between total debits and total credits gives the net closing debit balance.

Key Concept

Sales Ledger Control Account Balance Calculation
Estimated Time:2m 0s
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Topics

Sales Ledger Control Account

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