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Hi Hope some one can help, for some reason i find it hard to work out the journals, and i was wondering if anyone had any ideas of who they remember how to do them.<BR><BR>For Example Purchases valued at £7000 have been credited to the purchases account and debited to the purchases ledger control account .<BR><BR>How would you correct this i thought debit purchases, and credit purchases ledger control account.<BR><BR>Thankyou for any help.<BR><BR>Zoe
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JOURNALS FOUNDATION
Hi<BR><BR>I think what they mean by the 'purchases' account is the memorandum accounts, i.e. not part of the general ledger accounts. As an eg. your 3 customers Mr A, Mr B and Mr C will each have their own memorandum account showing their indvidual transactions. The sum of all the transactions in the 3 memorandum accounts will be shown in the purchase ledger control account.<BR><BR>So although the purchase accounts need changing to debit entries, they will not affect the final balances in your P+L or B/S.<BR><BR>With regard to the control accounts, always remember the purchase ledger control is your debtors and so generally have a debit balance. The reverse is true of the sales ledger control - suppliers are creditors and have a credit balance.<BR><BR>The answer to the question then is that no journal needs to take place as the Dr entry in the P/L control account is correct. The memorandum account does need changing though. <BR><BR>As a check, manually add up the totals in each memorandum account and make sure you get the total in your control account.0 -
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<BR>Just a note to say you have the sales ledger & purchase ledger the wrong way round.<BR><BR>Purchase ledger control account is the total of your creditors - you owe them money, therefore a credit balance<BR>Sales ledger control account is the total of your debtors - they owe you money, therefore a debit balance0 -
JOURNALS FOUNDATION
Yes, Eddy is right. This is an error that needs to be corrected. Purchases should be a debit entry, and the PL Control a credit. However, as the entry has been reversed you need to make the correction twice.<BR><BR>DR: Purchases £70,000<BR>CR: PL Control £70,000<BR><BR>This will cancel the original mistake<BR><BR>Then again<BR><BR>DR: Purchases £70,000<BR>CR: PL Control £70,000<BR><BR>This will put the entry into the accounts correctly.<BR><BR>Of course, you can shorten this by simply doubling the amount up and doing one journal:<BR><BR>DR: Purchases £140,000<BR>CR: PL Control £140,000<BR><BR>Both are correct treatments<BR><BR>Graham Blott0 -
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Thankyou all for your help, it is much appreciated. Zoe0