Control Accounts question, adapted from Zhong Hua Sec 2006
POA Prelim (removed those portions no longer in new syllabus). Sec
4E/5NA POA students should now be covering or having completed
Control Accounts.
Zhen Kai, a trader, has not kept accounts on the double entry
system. However the following particulars are available for the
year ended 31 July 2006:
$
Sales Ledger Control Account, 1 August 2005
18000
Purchases Ledger Control Account, 1 August 2005
17890
Stock, 1 August 2005
530
Stock, 31 July 2006
640
Total receipts from customers
(include $200 received from a debtor who was written off two years
ago) 102100
Receipts from cash sales
8700
Payments to creditors
62100
Purchases for cash
1500
Credit notes sent
1700
Credit notes received
2300
Discounts received from suppliers
1000
Discounts allowed on credit customers
250
Bad debts written off
1800
Customers' cheques returned unpaid by bank
3400
Increase in Provision for Doubtful Debts
1200
Interest charged to customers on overdue accounts
400
Debit balance in sales ledger set off against purchases ledger
balance
50
Credit balance in purchases ledger set off against sales ledger
balance
100
Sales Ledger Control account, 31 July 2006
13000
Purchases Ledger Control account, 31 July 2006
16760
Required:
1. Prepare the Sales Ledger Control account and the Purchases
Ledger Control account for the year ended 31 July 2006, showing
clearly the credit sales and credit purchases.
2. Debtors represent funds tied up which the firm cannot use
directly. Suggest 2 solutions to this problem, whereby a firm can
still give credit to its customers but, at the same time, have more
resources for spending.