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QUESTION 

Receivables control account

 

April Showers sells goods on credit to most of its customers. In order to control its receivables collection 

system, the company maintains a receivables control account. In preparing the accounts for the year to  

30 October 20X3 the accountant discovers that the total of all the personal accounts in the receivables 

ledger amounts to $12,802, whereas the balance on the receivables control account is $12,550. 

Upon investigating the matter, the following errors were discovered. 

(a) 

Sales for the week ending 27 March 20X3 amounting to $750 had been omitted from the control 

account. 

(b) 

A customer's account balance of $300 had not been included in the list of balances. 

(c) 

Cash received of $750 had been entered in a personal account as $570. 

(d) 

A personal account balance had been undercast by $200. 

(e) 

A contra item of $400 with the payables ledger had not been entered in the control account. 

(f) 

An irrecoverable debt of $500 had not been entered in the control account. 

(g) 

Cash received of $250 had been debited to a personal account. 

(h) 

Discounts received of $50 had been debited to Bell's receivables ledger account. 

(i) 

Returns inwards valued at $200 had not been included in the control account. 

(j) 

Cash received of $80 had been credited to a personal account as $8. 

(k) 

A cheque for $300 received from a customer had been dishonoured by the bank, but no 

adjustment had been made in the control account. 

Required 

(a) 

Prepare a corrected receivables control account, bringing down the amended balance as at 

1 November 20X3. 

(b) 

Prepare a statement showing the adjustments that are necessary to the list of personal account 

balances so that it reconciles with the amended receivables control account balance. 

ANSWER 

(a)  

RECEIVABLES 

CONTROL 

ACCOUNT 

 

$ 

 

$ 

Uncorrected balance b/d 

 

12,550 

 

Contra entry omitted (e) 

 

400 

Sales omitted (a) 

      

750 

 

Irrecoverable debt omitted (f) 

 

500 

Bank: cheque dishonoured (k) 

      

300 

 

Returns inwards omitted (i) 

 

200 

 

 

 

Amended balance c/d 

 

12,500 

 

 

              

 

13,600 

 

 

13,600   

 

Balance b/d 

 

12,500   

 

Note. Items (b), (c), (d), (g), (h) and (j) are matters affecting the personal accounts of customers. 

They have no effect on the control account. 

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