CHAPTER 3
Question 5 The Debtors Ledger Control Account of Eagan Ltd showed the following balances, €76,000 Dr and €470 Cr, on 31/12/2011. These figures did not agree with the Schedule (List) of Debtors Balances extracted on the same date. An examination of the books revealed the following:
(i) A credit note was sent to a customer for €120. The only entry made in the books was €12 debited to the customer’s account.
(ii) Discount allowed of €240 had been entered correctly in the books; the discount was subsequently disallowed. The only entry made in relation to discount disallowed was to debit the discount account by €24.
(iii) Interest amounting to €85 had been charged to a customer’s overdue account, and had been entered in the interest account as €58. Following a complaint from the customer, the interest was reduced by €25. This reduction had not been entered in the books.
(iv) Discount disallowed to a customer of €36 had been treated as discount allowed in the discount account. (v) An invoice sent to a customer for €160 had been entered in the appropriate day book as €16. When posting from this book to the ledger, no entry had been made in the customer’s account.
(vi) A cheque for €250 received from a customer in full settlement of a debt of €280 had been entered correctly in the books. However, the cheque was dishonoured but no entry had been made in the books relating to the cancelled cheque.
(vii) A credit note for €340 was sent to a customer and entered in the books. However, the accounts clerk forgot to deduct a restocking charge of 10%. When the error was realised the clerk immediately sent another credit note for €306 and debited this to the debtor’s account.
You are required to: (a) Prepare the adjusted Debtors Ledger Control Account. (b) Prepare the adjusted Schedule of Debtors showing the original balance.
Question 6 The Debtors Ledger Control Account of Franklin Ltd showed the following balances, €46,000 Dr and €270 Cr, on 31/12/2011. These figures did not agree with the Schedule (List) of Debtors Balances extracted on the same date. An examination of the books revealed the following:
(i) Cash sales of €500 and credit sales of €260 had both been entered by Franklin on the debit side of the customer’s account.
(ii) A credit note was sent to a customer amounting to €550. The only entry made in the books was €500 debited to the customer’s account.
(iii) Interest amounting to €55 was charged to a customer’s overdue account and had been entered on the incorrect side of the interest account as €56. Following a complaint from a customer, the interest was reduced to €25. This reduction had not been entered in the books.
(iv) A contra of €250 had been omitted from the books. (v) Bills receivable for €690 had been entered in the debit side of the customer’s account. No other entry had been made in the books.
(vi) A credit note for €1,250 was sent to a customer and entered in the books. However, the accounts clerk forgot to deduct a restocking charge of 6%. When the error was realised the clerk immediately sent another credit note for €1,175 and debited this to the debtor’s account. No other entry was made in the books.
You are required to: (a) Prepare the adjusted Debtors Ledger Control Account. (b) Prepare the adjusted Schedule of Debtors showing the original balance.
Contra entry always reduces the debtors account and the control account.
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