Tunde Enterprises operates control accounts for its dual ledger system. For the year ended… — JAMB UTME

Tunde Enterprises operates control accounts for its dual ledger system. For the year ended 31st December 2026, the following summary of transactions was extracted from the financial records:

- Sales Ledger debit balance at 1st January 2026: $\text{N}320,000$
- Total credit sales: $\text{N}850,000$
- Cash received from trade debtors: $\text{N}710,000$
- Cheques received from debtors dishonoured: $\text{N}15,000$
- Discounts allowed to debtors: $\text{N}25,000$
- Bad debts written off: $\text{N}18,000$
- Returns inwards: $\text{N}22,000$
- Interest charged to customers on overdue accounts: $\text{N}4,000$
- Cash refunded to a customer for overpayment: $\text{N}8,000$
- Contra entry / set-off between Sales Ledger and Purchases Ledger: $\text{N}35,000$
- Increase in provision for doubtful debts: $\text{N}12,000$

What is the closing debit balance of the Sales Ledger Control Account as at 31st December 2026?

Answer: 387000 Naira

Answer

The closing debit balance of the Sales Ledger Control Account as at 31st December 2026 is N387,000.

To find the closing debit balance of the Sales Ledger Control Account, add all transactions that increase debtors (opening debit balance, credit sales, dishonoured cheques, interest charged, customer refunds) to get N1,197,000. Then subtract all transactions that reduce debtors (cash received, discount allowed, bad debts, returns inwards, and the contra entry set-off of N35,000) totaling N810,000. Provision for doubtful debts is excluded because it is an estimated adjustment rather than a direct transaction with debtors. The resulting net balance is N387,000.

Step-by-Step Solution

Sum all debit entries in the Sales Ledger Control Account

Total Debits = 320,000 + 850,000 + 15,000 + 4,000 + 8,000 = 1,197,000

Opening debit balance, credit sales, dishonoured cheques, interest charged on overdue accounts, and customer refunds increase the total indebtedness of trade debtors.

Sum all credit entries in the Sales Ledger Control Account including contra set-offs

Total Credits = 710,000 + 25,000 + 18,000 + 22,000 + 35,000 = 810,000

Cash receipts, discounts allowed, bad debts, returns inwards, and contra set-offs against purchases ledger reduce the indebtedness of debtors.

Exclude irrelevant non-control account transactions

Provision for doubtful debts of N12,000 is excluded.

Provisions for doubtful debts are recorded in the Profit and Loss account and Provision account, never in the Sales Ledger Control Account.

Deduct total credits from total debits to compute the closing balance

Closing Balance = 1,197,000 - 810,000 = 387,000

The net remaining debit balance reflects the outstanding amount owed by trade debtors at the end of the accounting period.

Key Concept

Accounting for Contra Entries and Set-offs in Control Accounts

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