ExpertMedium2 marksShort Answer
ACCA · Question 08 · The Use of Double-Entry and Accounting Systems
A wholesale distributor has a receivables control account with an opening debit balance of $45,000. During the month, credit sales were $120,000, cash received from credit customers was $95,000, irrecoverable debts written off were $3,000, and discounts allowed were $2,000. What is the closing balance on the receivables control account? (Enter numbers only)
A wholesale distributor has a receivables control account with an opening debit balance of $45,000. During the month, credit sales were $120,000, cash received from credit customers was $95,000, irrecoverable debts written off were $3,000, and discounts allowed were $2,000. What is the closing balance on the receivables control account? (Enter numbers only)
How to approach this question
Set up a T-account. Debit opening balance and credit sales. Credit cash received, irrecoverable debts, and discounts allowed. Calculate the closing balance.
Full Answer
Opening balance: $45,000 (Dr)
Add: Credit sales $120,000 (Dr)
Less: Cash received $95,000 (Cr)
Less: Irrecoverable debts $3,000 (Cr)
Less: Discounts allowed $2,000 (Cr)
Closing balance = 45,000 + 120,000 - 95,000 - 3,000 - 2,000 = $65,000.
Common mistakes
Forgetting to deduct discounts allowed or adding irrecoverable debts instead of deducting them.
Practice the full ACCA FA — Financial Accounting Practice Exam 4
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