1
The trial balance of Happy Bookkeeper Ltd, as produced by its bookkeeper, includes the
following items:
Sales ledger control account £110,172
Purchases ledger control account £78,266
Suspense account (debit balance) £2,315
You have been given the following information:
(i) The sales ledger debit balances total £111,111 and the credit balances total £1,234.
(ii) The purchases ledger credit balances total £77,777 and the debit balances total £1,111.
(iii) The sales ledger includes a debit balance of £700 for Business X, and the purchases ledger
includes a credit balance of £800 relating to the same Business X. Only the net amount will
eventually be paid.
(iv) Included in the credit balance on the sales ledger is a balance of £600 in the name of H Smith.
This arose because a sales invoice for £600 had earlier been posted in error from the sales day
book to the debit of the account of M Smith in the purchases ledger.
(v) An allowance of £300 against some damaged goods had been omitted from the appropriate
account in the sales ledger. This allowance had been included in the control account.
(vi) An invoice for £456 had been entered in the purchases day book as £654.
(vii) A cash receipt from a credit customer for £345 had been entered in the cash book as £245.
(viii) The purchases day book had been overcast by £1,000.
(ix) The bank balance of £1,200 had been included in the trial balance, in error, as an overdraft.
(x) The bookkeeper had been instructed to write off £500 from customer Y’s account as a bad debt,
and to reduce the provision for doubtful debts by £700. By mistake, however, he had written
off £700 from customer Y’s account and
increased
the provision for doubtful debts by £500.
(xi) The debit balance on the insurance account in the nominal ledger of £3,456 had been
included in the trial balance as £3,546.
Required:
Record corrections in the control and suspense accounts. Attempt to reconcile the sales ledger
control account with the sales ledger balances, and the purchases ledger control account with the
purchases ledger balances. What further action do you recommend?
(Association of Chartered Certified Accountants)