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    Control Account Reconciliations

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    furqan
    The document discusses reconciling a company's control accounts to its individual ledger accounts. It provides an example of Alston's payables ledger reconciliation for the month of March. Several errors were discovered including discounts received not posted to the control account, an incorrect credit balance listed as a debit, a payment made but only posted to the control account, and set-offs posted to individual accounts but not the control account. The steps show how to correct each error by adjusting either the control account or individual ledger account balances.

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    Control Account Reconciliations

    Uploaded by

    furqan
    834 views3 pages
    The document discusses reconciling a company's control accounts to its individual ledger accounts. It provides an example of Alston's payables ledger reconciliation for the month of March. Several errors were discovered including discounts received not posted to the control account, an incorrect credit balance listed as a debit, a payment made but only posted to the control account, and set-offs posted to individual accounts but not the control account. The steps show how to correct each error by adjusting either the control account or individual ledger account balances.

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    Control Account Reconciliation

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    The document discusses reconciling a company's control accounts to its individual ledger accounts. It provides an example of Alston's payables ledger reconciliation for the month of March. Several errors were discovered including discounts received not posted to the control account, an incorrect credit balance listed as a debit, a payment made but only posted to the control account, and set-offs posted to individual accounts but not the control account. The steps show how to correct each error by adjusting either the control account or individual ledger account balances.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    834 views3 pages

    Control Account Reconciliations

    Uploaded by

    furqan
    The document discusses reconciling a company's control accounts to its individual ledger accounts. It provides an example of Alston's payables ledger reconciliation for the month of March. Several errors were discovered including discounts received not posted to the control account, an incorrect credit balance listed as a debit, a payment made but only posted to the control account, and set-offs posted to individual accounts but not the control account. The steps show how to correct each error by adjusting either the control account or individual ledger account balances.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Control Account Reconciliations

    Introduction
    The reconciliation is a working to ensure that the entries in the sales and
    purchase ledgers (the memorandums, or list of individual balances) agree
    with the entries in the control accounts. The totals in each should be exactly
    the same. If not it indicates an error in either the memorandum account or
    the control account. All discrepancies should be investigated and corrected.
    Preparing a control account reconciliation
    The format of a control account reconciliation, in this case for receivables, is
    as follows:

    Illustration Preparing a control account reconciliation


    Alston's payables ledger control account is an integral part of the double
    entry system. Individual ledger account balances are listed and totalled on a
    monthly basis, and reconciled to the control account balance. Information for
    the month of March is as follows:
    (1)Individual ledger account balances at 31 March have been listed out and
    totalled $19,766.
    (2)The payables ledger control account balance at 31 March is $21,832.
    (3)On further examination the following errors are discovered:

    The total of discount received for the month, amounting to $1,715, has
    not been entered in the control account but has been entered in the
    individual ledger accounts.

    On listing-out, an individual credit balance of $205 has been incorrectly


    treated as a debit.

    A petty cash payment to a supplier amounting to $63 has been


    correctly treated in the control account, but no entry has been made in
    the supplier's individual ledger account.

    The purchases day book total for March has been undercast
    (understated) by $2,000.

    Contras (set-offs) with the receivables ledger, amounting in total to


    $2,004, have been correctly treated in the individual ledger accounts
    but no entry has been made in the control account.

    Step 1
    The total of discount received in the cash book should have been debited to
    the payables ledger control account and credited to discount received. Thus,
    if the posting has not been entered in either double entry account it clearly
    should be. As this has already been entered into the individual ledger
    accounts, no adjustment is required to the list of balances.
    Step 2
    Individual credit balances are extracted from the payables ledger. Here, this
    error affects the ledger accounts balance. No adjustment is required to the
    control account, only to the list of balances.
    Step 3
    The information clearly states that the error has been made in the individual
    ledger accounts. Amendments should be made to the list of balances. Again,
    no amendment is required to the control accounts.
    Step 4
    The total of the purchases day book is posted by debiting purchases and
    crediting payables ledger control account. If the total is understated, the

    following bookkeeping entry must be made, posting the $2,000


    understatement:
    Dr Purchases
    Cr Payables ledger control account
    As the individual ledger accounts in the payables ledger are posted
    individually from the purchases day book, the total of the day book being
    understated will not affect the listing of the balances in the payables ledger.
    Step 5
    Here it is clear that the error affects the control account, not the payables
    ledger. Correction should be made by the bookkeeping entry:
    Dr Payables ledger control account
    Cr Receivables ledger control account

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