ACCA Applied Knowledge · Financial Accounting · Sales and purchases
On 1 January, Delta's sales ledger control account balance was $40,000 debit. During the year credit sales were $300,000 (including sales tax), cash received from customers was $270,000, sales returns were $12,000 (including sales tax), and irrecoverable debts written off were $3,000. Cash discounts allowed were $5,000. What is the closing balance?
The closing balance is $50,000 debit. Start with 40,000, add credit sales of 300,000, then deduct cash received 270,000, returns 12,000, irrecoverable debts 3,000 and discounts allowed 5,000, all of which reduce the amount customers owe.
- A$50,000Correct
- B$55,000
- C$45,000
- D$53,000
Explanation
Closing balance = 40,000 + 300,000 - 270,000 - 12,000 - 3,000 - 5,000 = 50,000. Option B omits the discount allowed. Option C deducts the discount and write-off but ignores the returns incorrectly. Option D omits the write-off of 3,000 and the discount error mix.
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