Neco 2018 Financial Accounting Question 8

Alpha Traders Ltd. maintains separate subsidiary ledgers for debtors and creditors and uses control accounts in the general ledger. The following information relates to the month of February 2026: Opening balances (1 Feb 2026): - Sales Ledger Control Account (debtors) – Debit ₦ 312,500 - Purchases Ledger Control Account (creditors) – Credit ₦ 198,000 Transactions during February: 1. Credit sales of ₦ 145,800 were made on account. 2. Cash sales of ₦ 27,400 were recorded (no effect on control accounts). 3. Collections from debtors amounted to ₦ 118,900 (cash received). 4. Returns from customers (sales returns) amounted to ₦ 6,200 and were credited to the sales ledger control account. 5. Purchases on credit amounted to ₦ 89,750. 6. Payments to creditors (cash) amounted to ₦ 73,600. 7. Purchase returns (goods returned to suppliers) amounted to ₦ 4,500 and were debited to the purchases ledger control account. 8. Discount received from a supplier amounted to ₦ 1,200 and was credited to the purchases ledger control account. 9. Discount allowed to a customer amounted to ₦ 900 and was debited to the sales ledger control account. Using the above data, answer the following: a) Prepare the Sales Ledger Control Account for February showing opening balance, all movements and the closing balance. b) Prepare the Purchases Ledger Control Account for February showing opening balance, all movements and the closing balance. c) State the closing balances of the Debtors Ledger and Creditors Ledger as reflected by the control accounts. d) Discuss two advantages of using control accounts in a double‑entry accounting system.