A receivables ledger control account has an opening balance of £45,200. During the month credit sales were £212,000, sales returns £3,600, cash received £198,500, settlement discounts allowed £2,100 and irrecoverable debts written off £1,800. What is the closing balance?
Answer and explanation
Correct answer: B. £51,200
- Step 1: Start with the opening balance of £45,200 and add credit sales of £212,000.
- Step 2: Deduct everything that reduces what customers owe: returns £3,600, cash £198,500, discounts £2,100 and write-offs £1,800.
- Step 3: £45,200 + £212,000 - £3,600 - £198,500 - £2,100 - £1,800 = £51,200.
Answer
£51,200.
Why not the others: £58,400 adds the returns instead of deducting them. £59,000 adds the discounts and write-offs instead of deducting them. £58,700 ignores returns, discounts and write-offs, which also reduce receivables.
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