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Difficulty: EasyControl Account Error Corrections and Ledger Reconciliation

Before reconciliation, the Sales Ledger Control Account of Bolanle Stores showed a debit balance of ���75,000\text{���}75,000. It was subsequently discovered that a total of ₦1,200\text{₦}1,200 for discount allowed had been completely omitted from the control account. What is the corrected balance of the Sales Ledger Control Account?

  1. ₦73,800\text{₦}73,800Answer
  2. B
    ₦76,200\text{₦}76,200
  3. C
    ₦75,000\text{₦}75,000
  4. D
    ₦72,600\text{₦}72,600

Answer

The corrected balance of the Sales Ledger Control Account is ₦73,800\text{₦}73,800.
Discount allowed reduces customer balances and is credited to the Sales Ledger Control Account. Deducting ₦1,200\text{₦}1,200 from the unadjusted debit balance of ₦75,000\text{₦}75,000 results in the correct balance of ₦73,800\text{₦}73,800.

Step-by-Step Solution

1
Identify the unadjusted control account balance
Unadjusted debit balance = ₦75,000\text{₦}75,000
This is the starting balance before incorporating omitted entries.
2
Determine the accounting treatment for omitted discount allowed
Credit the Sales Ledger Control Account with ₦1,200\text{₦}1,200
Discount allowed reduces total receivables (debtors balance) and belongs on the credit side of the sales ledger control account.
3
Calculate the corrected control account balance
Corrected balance = ₦75,000−₦1,200=₦73,800\text{₦}75,000 - \text{₦}1,200 = \text{₦}73,800
Deducting the credit item from the initial debit balance yields the revised balance.

Key Concept

Control Account Error Corrections
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Topics

Control Account Error Corrections and Ledger Reconciliation

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