CIMA BA3 · Chapter 5 · Question 3 of 10
The following information relates to a business's receivables for the year: opening balance $28,400; credit sales $196,500; cash sales $12,000; cash received from credit customers $181,300; sales returns $4,700; irrecoverable debts written off $2,100; contra with the payables ledger control account $1,600; increase in allowance for receivables $900. What is the closing balance on the receivables ledger control account?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $35,200
Explanation
Debits: opening $28,400 + credit sales $196,500 = $224,900. Credits: cash received $181,300 + returns $4,700 + irrecoverable debts $2,100 + contra $1,600 = $189,700. Closing balance = $224,900 - $189,700 = $35,200. Cash sales never pass through receivables, and the allowance is kept in a separate account.
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