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Difficulty: HardControl Account Error Corrections and Ledger Reconciliation

Prior to ledger reconciliation, the Sales Ledger Control Account of Tari Traders showed a debit balance of ₦482,000₦482,000 on 31 December 2025. An audit of the books revealed the following errors:

1. A sales invoice of ₦18,400₦18,400 issued to a customer was completely omitted from the sales journal.
2. A cash refund of ₦5,200₦5,200 made to a debtor was mistakenly credited to the Sales Ledger Control Account.
3. The total of the sales returns journal was overcast by ₦3,500₦3,500.
4. Discount allowed totaling ₦2,800₦2,800 had been posted to the debit side of the Sales Ledger Control Account instead of the credit side.

What is the adjusted balance of the Sales Ledger Control Account?

  1. ₦508,700Answer
  2. B
    ₦506,300
  3. C
    ₦519,900
  4. D
    ₦492,100

Answer

The adjusted balance of the Sales Ledger Control Account is ₦508,700.
The correct adjusted balance of ₦508,700 is derived by systematically applying double-entry control account principles to each error: adding ₦18,400 for the unrecorded invoice, adding ₦10,400 to reverse and correctly debit the cash refund, adding ₦3,500 to correct overcredited sales returns, and deducting ₦5,600 to remove the erroneous debit and apply the credit for discount allowed.

Step-by-Step Solution

1
Identify the unadjusted starting debit balance
Unadjusted Debit Balance = ₦482,000₦482,000
This is the initial ledger control balance prior to adjusting for discovered errors.
2
Adjust for omitted sales invoice
Add Debit of ₦18,400₦18,400
An omitted sales invoice means total sales posted to the control account was understated, requiring a debit entry to increase the control balance.
3
Correct cash refund credited in error
Add Debit of ₦10,400₦10,400 (₦5,200×2₦5,200 \times 2)
A cash refund to a customer increases the debtor balance (debit). Crediting it by mistake requires a debit of twice the amount—once to cancel the wrong credit and once to record the correct debit.
4
Correct overcast sales returns journal
Add Debit of ₦3,500₦3,500
Sales returns reduce debtors (credited to control account). Because the returns journal total was overcast, too much was credited, so debiting ₦3,500₦3,500 restores the correct balance.
5
Correct discount allowed wrongly debited
Subtract Credit of ₦5,600₦5,600 (₦2,800×2₦2,800 \times 2)
Discount allowed reduces debtors and belongs on the credit side of the control account. Posting it to the debit side requires a credit entry of twice the amount (₦5,600₦5,600) to rectify.
6
Compute the final adjusted debit balance
Adjusted Balance = ₦482,000+₦18,400+₦10,400+₦3,500−₦5,600=₦508,700₦482,000 + ₦18,400 + ₦10,400 + ₦3,500 - ₦5,600 = ₦508,700
Summing all corrective debit and credit entries yields the accurate adjusted Sales Ledger Control Account balance.

Key Concept

Control Account Error Correction and Wrong-Side Adjustment Rules
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Topics

Control Account Error Corrections and Ledger Reconciliation

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