Create a trade receivables ledger control, Financial Accounting

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Problem:

(a) Many businesses find it useful to maintain a control account in respect of both their trade receivables and trade payables. Describe why such control accounts are useful.

(b) The subsequent information relates to March 2009:

On 1st March 2009, the balances in the trade receivables ledger were Rs 348,560 Dr and Rs 12,800 Cr.

During the month of March 2009 the given transactions took place:

1. Sales were Rs 598,200 (85% of which were on credit terms).
2. Sales returns from credit customers totalled Rs 18,240.
3. Cheques for Rs 394,250 were received from credit customers; Rs 32,832 of this amount had been received subject to 4% cash discount.
4. Customers' cheques for Rs 4,650 were dishonoured by the bank.
5. 4% cash discount had been allowed in respect of one of these cheques for Rs 1,920.
6. Rs 5,400 had been set off by contra in the trade payables ledger.

Credit balances in customers' account as at 31st March 2009 amounted to Rs 11,400

Required:

Create a Trade Receivables Ledger Control Account for the month of March 2009.


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