ACCA Applied Knowledge · Financial Accounting · Trial balance
At 31 December, Kestrel Co's receivables ledger control account shows: opening balance $42,000 debit; credit sales $168,000; cash received from customers $151,000; sales returns $6,000; irrecoverable debts written off $4,000. What is the balance on the control account and how is it shown in the trial balance?
The control account has a debit balance of $49,000. Opening balance plus credit sales gives $210,000 of debits, and cash received, returns and irrecoverable debts total $161,000 of credits. The difference is a debit balance, because receivables are assets.
- A$49,000 debitCorrect
- B$49,000 credit
- C$41,000 debit
- D$57,000 debit
Explanation
Debit side: 42,000 + 168,000 = 210,000. Credit side: 151,000 + 6,000 + 4,000 = 161,000. Balance = 49,000 debit. Option $57,000 results from ignoring the returns and the write-off while still deducting cash incorrectly; $41,000 results from adding returns and write-off incorrectly.
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