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Difficulty: HardPurchases Ledger Control Account

The following balance information was extracted from the books of Koko Enterprises for the month ended 31st October 2025:

Transaction DetailsAmount (₦)
Balance in creditors ledger (1st Oct 2025) - Credit18,50018,500
Balance in creditors ledger (1st Oct 2025) - Debit400400
Total credit purchases62,00062,000
Cash purchases12,00012,000
Payments made to trade creditors45,00045,000
Discount received from suppliers2,4002,400
Discount allowed to customers1,8001,800
Returns outwards3,1003,100
Set-off contra entry with sales ledger1,5001,500
Interest charged by suppliers on overdue accounts600600
Cash refund received from supplier for overpayment800800

What is the closing credit balance of the Purchases Ledger Control Account at 31st October 2025?

  1. ₦29,500Answer
  2. B
    ₦34,300
  3. C
    ₦41,500
  4. D
    ₦30,100

Answer

The closing credit balance of the Purchases Ledger Control Account as of 31st October 2025 is ₦29,500.
To find the closing credit balance of the Purchases Ledger Control Account, sum all credit side items (Opening Credit Balance ₦18,500 + Credit Purchases ₦62,000 + Interest Charged ₦600 + Supplier Refund ₦800 = ₦81,900) and subtract all debit side items (Opening Debit Balance ₦400 + Payments to Creditors ₦45,000 + Discount Received ₦2,400 + Returns Outwards ₦3,100 + Set-off ₦1,500 = ₦52,400). This yields ₦81,900 - ₦52,400 = ₦29,500. Cash purchases and discount allowed are excluded as they do not affect creditors' individual ledger balances.

Step-by-Step Solution

1
Filter out transactions that do not belong in the Purchases Ledger Control Account.
Cash purchases (₦12,000) belong in the Cash Book/Purchases Account, and discount allowed (₦1,800) belongs in the Sales Ledger Control Account.
Control accounts record summary details strictly affecting trade payables/creditors on credit terms.
2
Calculate total credit entries of the Purchases Ledger Control Account.
Total Credit = Opening Credit Balance (₦18,500) + Credit Purchases (₦62,000) + Interest Charged by Suppliers (₦600) + Refund from Supplier (₦800) = ₦81,900.
Transactions increasing liability to suppliers are posted to the credit side.
3
Calculate total debit entries before closing balance.
Total Debit = Opening Debit Balance (₦400) + Payments to Creditors (₦45,000) + Discount Received (₦2,400) + Returns Outwards (₦3,100) + Set-off Contra (₦1,500) = ₦52,400.
Transactions reducing liability to suppliers are posted to the debit side.
4
Determine the closing credit balance.
Closing Credit Balance = Total Credit (₦81,900) - Total Debit (₦52,400) = ₦29,500.
The closing balance represents the net credit balance required to balance the control account.

Key Concept

Purchases Ledger Control Account Balance Calculation
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Topics

Purchases Ledger Control Account

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