One of your colleagues has asked for your assistance. He is preparing the annual accounts for a client, but cannot agree the balances on the sales ledger and purchase ledger control accounts with the listing of the individual account balances. Following balances are provided as on December 31, 2011.

Here's a step-by-step reconciliation of the Sales Ledger Control Account and the Purchases Ledger Control Account. Sales Ledger Control Account Reconciliation Step 1: Determine the initial net balances. The sales ledger control account has a debit balance of GH¢ 32,784 and a credit balance of GH¢ 3,000. The net balance of the sales ledger control account is: Initial SLCA Net Balance = GH¢ 32,784 (Dr) - GH¢ 3,000 (Cr) = GH¢ 29,784 (Dr) The net balance of individual customer accounts is GH¢ 28,956 (Dr). Step 2: Adjust the Sales Ledger Control Account (SLCA) for errors. vi. Set off with supplier (GH¢ 750): The personal accounts were updated, but the control account was not. The SLCA should be credited to reduce receivables. SLCA adjustment = - GH¢ 750 vii. Discounts allowed not posted to nominal ledger (GH¢ 328): Discounts allowed reduce receivables. The SLCA should have been credited. SLCA adjustment = - GH¢ 328 viii. Sales day book errors: Underestimated by GH¢ 53: The SLCA (debit) was understated. SLCA adjustment = + GH¢ 53 Overstated by GH¢ 29: The SLCA (debit) was overstated. SLCA adjustment = - GH¢ 29 Step 3: Calculate the Adjusted Sales Ledger Control Account Balance. Adjusted SLCA Balance = GH¢ 29,784 - GH¢ 750 - GH¢ 328 + GH¢ 53 - GH¢ 29 Adjusted SLCA Balance = GH¢ 28,730 (Dr) Step 4: Adjust the List of Individual Customer Account Balances for errors. v. Sales invoice posted incorrectly (GH¢ 2,570 as GH¢ 2,750): The customer's account is overstated by GH¢ 180 (GH¢ 2,750 - GH¢ 2,570). List adjustment = - GH¢ 180 vi. Set off with supplier (GH¢ 750): The customer's personal account was updated, reducing the balance. List adjustment = - GH¢ 750 ix. Misposting within subsidiary ledger (GH¢ 427): Posting to the wrong customer account does not affect the total* of the list of balances. List adjustment = GH¢ 0 Step 5: Calculate the Adjusted List of Individual Customer Account Balances. Adjusted List Balance = GH¢ 28,956 - GH¢ 180 - GH¢ 750 Adjusted List Balance = GH¢ 28,026 (Dr) Purchases Ledger Control Account Reconciliation Step 6: Determine the initial net balances. The purchases ledger control account balance is GH¢ 22,372 (Cr). The net balance of individual supplier accounts is GH¢ 21,031 (Cr). Step 7: Adjust the Purchases Ledger Control Account (PLCA) for errors. vi. Set off with customer (GH¢ 750): The personal accounts were updated, but the control account was not. The PLCA should be debited to reduce payables. PLCA adjustment = + GH¢ 750 x. Goods returned not recorded in purchase return book (GH¢ 2,100): The credit note was recorded in the supplier's account, but the purchase return book (which feeds the PLCA) was not updated. The PLCA (credit) is overstated. PLCA adjustment = - GH¢ 2,100 Step 8: Calculate the Adjusted Purchases Ledger Control Account Balance. Adjusted PLCA Balance = GH¢ 22,372 + GH¢ 750 - GH¢ 2,100 Adjusted PLCA Balance = GH¢ 21,022 (Cr) Step 9: Adjust the List of Individual Supplier Account Balances for errors. vi. Set off with customer (GH¢ 750): The supplier's personal account was updated, reducing the balance. List adjustment = - GH¢ 750 x. Goods returned (GH¢ 2,100): The credit note was correctly recorded in the supplier's account. List adjustment = GH¢ 0 Step 10: Calculate the Adjusted List of Individual Supplier Account Balances. Adjusted List Balance = GH¢ 21,031 - GH¢ 750 Adjusted List Balance = GH¢ 20,281 (Cr) Summary of Adjusted Balances: Adjusted Sales Ledger Control Account Balance: GH¢ 28,730 (Dr) Adjusted List of Individual Customer Account Balances: GH¢ 28,026 (Dr) Adjusted Purchases Ledger Control Account Balance: GH¢ 21,022 (Cr) Adjusted List of Individual Supplier Account Balances: GH¢ 20,281 (Cr) That's 2 down. 3 left today — send the next one.