welcome to contacts in this lesson we're going to be looking at the data's reconciliation going to see how we need to reconcile our data's control as well as our data's list so we're basically focusing on the data's control and the data's ledger so what is data's controller what does it do the data control account captures the total of all the entries that are posted to each debtor's account in the debtors ledger so it captures the total of all the entries so when you see debtors control it will tell you all the amounts that we are owed by all the debtors okay that total of the debtors control tells us how much we are owed the balance of the debtors control account at the end of the period should equal to the total of the balances of the individual accounts of each data provided that everything was done correctly so what we are saying here is that what you have on your data's control account that total amount or that final balance should be the same as all the amounts that we are owed by each data so if we have let's say 10 debtors if you had to add all the amounts that we are owed by all those debtors it should equal what is in the debtors control account so that's what we are saying here but if they are not the same then we have to perform at that task reconciliation and that's the example you're going to look at right now and go through a question where we'll be able to answer this so what errors are we identifying here well if the debtors control account balance at the end of the period does not equal to the total of the balances of the individual accounts of each data like we've just mentioned this indicates that one or more errors may have been made so if they're not the same your data's control account and the total of the balances of the individual accounts of each data then we have probably made a mistake somewhere we have omitted something so what do we need to do we need to identify errors that affect the data's control account and the debtors ledger account for example incorrect amount entered in the journal or omitted from the journal so that is what would affect both your debtors control account and your debtors ledger accounts and what else do we identify we identify errors that affect the data's control account only and an example for that is posting the wrong amount from a journal to that that has control so that should be an error that affects only the data's control and what else identify errors that affect the data's ledger only an example for that would be posting to the wrong debtors account so that is where students usually better by identifying errors that affect the data's control account and the debtor's ledger account or identifying errors that affect the debtors control account only as well as identifying errors that affect the debtors ledger only mistakes should be made in identifying which one it affects and how we account for them and that is why the reconciliation will not work well but in this example i hope you should be able to do it after we look at this one so let's go into the example and show you how to do this we are told that the following information was extracted from the records of ferrero mia a registered vet vendor that is calculated at 15 percent and we are given all these details we also told that the entries made in the general journal we are given down here and we are also told what errors have been made and we are asked to do two things the first one is to prepare the data's control account and balance the account on the 31st of may 2020 and the second one there is to reconcile the balance in the data's control account with the corrected total of the debtors list on the 31st of may 2020 and remember we've been mentioning this the reconciliation of the data control account and the debtors list they should be the same the totals of the two so let's get into the examples and tackle it here we are given the totals of the following subsidiary books on the 31st of may 2029 dates here are very important and you'll see how it applies when you're answering the question so the first requirement is to prepare the debtors control account and balance the account on the 1st of may 2020. so we are given the following subsidiary books or the following totals of the subsidiary books and we are given the cash receipts journal we are given the sales journal and the sales returns journal now you need to know obviously what they stand for and what they are and i hope you do and we look at those ones separately in different lessons so we looked at the cash receipts journal the sales journal and the sales returns journal you'll find the links to those lessons in the description below but the cash receipts journal is where all the cash that we have received are recorded and we are given the total for the debtors column remember here when you're dealing with the reconciliation of the debtors control account and the debt has list or the data's ledger we are dealing with the debtors column of the various journal accounts so the cash receipts journal the debtors column meaning the money we have received from our debtors and this is as at the 31st of may 2020 the sales journal is where we record all the sales we have made to our debtors on credit okay and then the sales returns journal is where we record everything that has been returned by our debtors by those who owe us money and then we are also given here the debtors control balance on the 30th of april 2020 very important like i say dates so we are given the subsidiary books on the 31st of may but here the debtors control account were given on the 30th of april meaning the end of the previous month that means this 47 000 rent for the debtors control has not taken into account any of these three things mentioned on top here we're also given the total of debtors left on the 31st of may 2020 which is at the end of the month we are working with because we are preparing these accounts that we are asked to prepare as at the end of the 1st of may 2020 okay so let's begin with this one here remember when we are preparing the data's control account we are doing the t account and it's very important that you already know how to do a t account and i hope you already know that we'll just be explaining them briefly as we go through it but we have done a quick lesson where we explained in detail and to greatly help you understand how to do the t account or the general ledger so you'll find the link to that lesson as well in the description below so here's how we answer our question we have our debtors control we draw the t account obviously the debit on the left hand side and the credit on the right hand side and then we go back to our question the first thing that we like to do or i like to do is to look at the information that we are given we look at the journals i like to look at the journals first and see what they are given but the first thing that we we should do is to put the debtors control balance that we are given as at the beginning of this month or as at the end of the previous month which is the same thing the end of the previous month and the beginning of this month is the same thing so the end of the previous month is the 30th of april 2020 and that's the date at which we have the amount for the debtors control so we're given the data control balance on 30th of april 2020 so that's the balance brought down so we're just going to take the 47 000 run and put it on the debit side remember data's control is an asset it increases on the debit side and decreases on the credit side and i hope you also know your debits and your credits we'll leave the links to all those lessons to understanding them in the description below so we put the balance brought down of this 47 000 right on the debit side so we put the date day on the 1st of may because that's the beginning of this month and then we put balance brought down and then we put down the 47 000 red okay now that we've done that i like to highlight them after we've done each one so i've highlighted that one and then we can begin with the top ones here the subsidiary books we are given the totals the first one there is the cash receipts journal and it's the debtors column meaning the people who orders have paid us and we have 38 000 rand there so the first thing i like to do is to put there the date and remember this time is the 31st of may because that's the date at which we have those totals for the subsidiary ledger as you go back here you'll see the 3 8 000 ran and we're told the subsidiary books are on the 31st of may 2020 so i put the bank remember cash receipts journal meaning we're receiving cash from our customers so it's bank okay and remember we're also dealing with that here so some would like to put bank and vet but bank here kept us everything we know that it's including that because when our customers pay us they don't just pay us amount excluding that they pay us including that so i put bank there but before i put the amount for bank i need to check from the other information we are given because we are told that the entries made in the general journal we need to check that and also look at the errors made and see if there is anything else that affects the debtors column of the cash receipts journal which we are given here so is there anything else that will affect this 38 000 ran so let's read and see the entries made in the general journal which all debtors of the credit balance were transferred to the characters ledger that does not add graham's account who is a debtor was written off that does not affect our crj or cash receipts journal e-player's account who is a data was charged interest and overdue account that does not as well inventory sales of 760. data was wrongly entered in the debtors column of the sales journalist 720 that does not and then at the debtors column of the cash receipts journal was undercast by 300 rent that definitely affects our amount that 38 000 rent we are told that the debtors column of the cash receipts journal which is where we get this total of 38 000 rent was undercast by 300 grand what does that mean it means that the debtors column in the cash register's journal omitted 300 rent or left out 300 rent so it was understated by 300 grand so what do we need to do we need to add that 300 rent to the 38 000 rent i hope that has made sense and you can see we have nothing else that affects our cash receipts journal debtors column we're just going to take the 38 000 rent plus the 300 ran and we'll have our answer which is 38 thousand three hundred rand i hope that was simple enough and why do we put it on the credit side because our debtors have paid us remember cash receipts journal the debtors column records everything that you've been paid by our debtors that means it reduces our asset which is the debtor's control whenever your debtors pay you they reduce the debtors control meaning less people now owe us so we put there the 38 300 ran and then we go back i've just highlighted the cash receipts journal because we're done with that one and we also make sure we highlight the debtors column of the cash receipts journal of 300 grand and now that we've done that we continue let's look at number two sales journal we have 54 000 ran so what is the sales journal like i just mentioned previously the sales journal is where we record everything that we sold to our debtors so that means our data still owe us this 54 000 rent so we're going to put it on the debit side and remember this is at the end of the month okay so it should read the 31st of may so it's just a typo i wrote 30th of may instead of 31st of may so now this is the end of the month after everything has been taken into account and what do we record into our sales journal we record our sales to our data so we put their sales or we put sales and vet just indicating that we are owed by our debtors sales inclusive of that now that we have done that we'll go back and see if there's anything else pertaining to the sales journal that we need to take account of like we did for the cash receipts journal so we have read through many of these and we need to see if there's anything else that affects that so remember we had read them earlier on and one that i identified there is the inventory sales to one of the debtors seeking boy so it's inventory sales of 760 rand to seek him boy and data was wrongly entered in the debtors column of the sales journal as 720 ran and posted as such that was recorded correctly so what are we saying here we we sold inventory to our data seek and boy were supposed to record the 760 ran but by mistake we recorded 720 that means we have understated our sales on credit to this data so what does that affect that affects our debtors control remember it was entered in the debtors column of the sales journal at 720. so if it affects our sales journal it will affect our debtors control account another thing that it will affect it will affect our debtors list remember we are reconciling both the data control account and the debtors list to see if they will be the same and remember that's the requirement number two saying reconcile the balance in the data's control account with the correct total of the debtors list on the 31st of may 2020. so if they mention to you a debtor like here they have mentioned seeking boy most likely it affects your debtors list as well so we have understated the amount that you owes us by how much well that's the difference between 760 rent and 720 rent so it's 40 rent so we have understated it that means we're going to take 54 000 rent here the sales journal class 40 rent and that's how to look fifty four thousand ran plus forty ran and it will give us fifty four thousand and forty rand and that one comes from the sales journal so that's our folio and i had forgotten to do it here as well for bank our folio was cash receipts journal or crj i hope it's making sense so far so let's go back and highlight our work we're going to highlight the sales journal before we highlight the error that was made the 760 which was written by mistake 720 before we arrived this one here we also know like i just mentioned it affects our debtors list so let's look for the total of the debtors list and you can see here under here we are told the total of the debtors list on the 31st of may 2020 was 61 471 rand so we're going to do that one as well at the same time so we are doing the second requirement at the same time so put the total of the debtors list on the 31st of may 2020 before adjustments meaning before we take into account the entries are made as well as the correction of errors that we need to do and then what do we do we put in that amount of 40 rent remember that 40 ran he owes us 760 instead of 720 so we recorded 720 so we need to record the difference which is the 40 rank so we're going to write the understated sales amount entered for c camboy which is our data and we put therefore tilland as a positive because he owes us 40 and more because we understated it by 40 rand and then we go and now highlight the letters leave the total of the debtors list remember we just put that in as well as the inventory sales of 760. and now that you've done that we can continue our work we look at the third one here we are told that the sales returns journal which is the data's control column that you're focusing on is 1300 rent the sales returns journal so again we see if there's anything here pertaining to sales journal in the entries that were made as well as the errors made and we can see that we have nothing pertaining to sales returns journal or nothing about the returns from our debtors so if there is nothing we're just going to put the sales returns journal and put the amount of 1 300. and remember we put it on the credit side because our data has returned goods back to us that means they don't owe us that amount again so we reduce our data's control we put it on the credit side so we put your sales returns journal and the folio is the sales returns journal here and you put the 1 300 rand now here the details you don't have to put the word journal you can just put sales returns so there was a typo i was just supposed to put sales returns and then in the follow you put the sales returns journal but i don't think that would make you incorrectly if you put the sales returns john all day but we just talking about the sales returns of 1 300 rent and then we can go back and make sure we highlight that one and then we move on entries made in the general journal remember we're making these entries or we are adjusting our data control account because the data control balance that we had was as at the end of the previous month that means there's no taking account of this information so that's why we are taking them into account now so we are told here debtors with credit balances were transferred to the creditors ledger so what happened here if it had a credit balance it was reducing our debtors control so what does it mean since we are moving into the creditors ledger we need to reinstate the 230 run in our data control so when you see a note like this debtors with the credit balances or debtors with credit balances were transferred to the creditors ledger then you know that you need to add it back to your debtors control account so we going to put it on the debit side as 230 rand and what is the description the description there is creditors control so we're going to put here creditors control and that's from the general journal as the question had indicated that those are the entries that were made and the amount is 230 right i hope it has made sense whenever you've moved something to another account like from debtors to the creditors ledger then you will reinstate it meaning increasing your data's control and that's what you've just done so let's make sure we highlight that one and then we'll move on to the next one we're told that our graham's account who is a debtor was written off so this guy's account was written off that is bad debts now i hope you know about bad debts that's an easy one you just put it on the credit side of the data's control account because it's reducing our data so whenever you write off a debtor's account it reduces your debtors so we're going to put in the 1105 so put on the credit side and write the bad debts and obviously the general journal and we put the 1105 rent and we go back and we highlight that one and then we move to the next one e players account who is a data was charged interest on overdue account meaning this data was supposed to have paid us and has not paid us so we charge them interest and whenever we charge them interest meaning they owe us more so they owe us more by 66 rent so whenever they owe us more we put it on the debit side of the debtors control account so we're going to take the 66 rent and put it on the debit side so we'll go to our data control account we write the interest income remember when you charge your customer interest that's interest income and that's the general journal and then we put the 66 run very easy on that one as well so we just highlight that one and you can see we are left with just one last thing to do we're told inventory returned by c warren 880 including that was not posted to his account in the debtors ledger now if you pause there if it was not posted to his account the data's ledger that means it affects our data's list that means we have to also take account of that that means we have to deduct it from our debtors list because inventory was returned by this customer so we need to reduce his account by 880 because he no longer owes us he returned the goods back to us and then we are also told that this was entered in the sales returns journal very important if they didn't tell us that we're going to put it into our data control account as sales returns but since they told us that this was entered in the sales returns journal meaning it's not an error that was made or it was posted correctly so it doesn't affect our daughter's control account it only affects our debtors list or our data's ledger so we need to go and deduct the 880 because this data see what are no longer other so we go to our debtors list this one over here and we put sales returns not posted to see what an account and we put the 880 ran it's a negative because he no longer owes us he had returned the goods back to us but we did not post it to the debtors ledger as it has said here it was not posted to his account in the letters ledger and now that we are done with that one we highlight it and then as you can see we have just completed all that we needed to do and we've taken account of everything now all that we need to do remember the first one say prepare that that's us control account and balance the account on 31 may 2020. now balancing the account is like closing off the account to see what balance we have at the end and we showed how to do that when we were doing a lesson on the general ledger on or how to do the general ledger so i hope you know so let's get into it now you can see we have done everything that we needed to do so what we need to do we need to identify which side is bigger between the debit side and the credit side so you just need to add them and see which side is bigger but even without adding you can see our debit side is the bigger one so if you add everything together you put the total on the debit side 101 336 and then you put the same total on the credit side 101 336 and then you ask yourself what is missing on the credit side to make it equal to 101 336 meaning equal to the debit side so we're going to take 101 336 minus all these and it's going to give us what is called the balance carried down so we're going to put on the credit side balance carried down and what i was missing there is the 60 631 rent and we know now that's our closing balance for the data's control so we're going to put it on the debit side so when we put it on the debit side it's going to be written balance broad down and you put the exact same amount as the one from balance carried down of thousand six hundred and thirty one rent if you know the general ledger it should have been easy for you to complete this or to close off the account or to balance of the account and once you've done that we know that our debtors lift balance here at the end of the period should be the same as the sixty thousand six hundred and thirty one ran if they are not the same you have made a mistake somewhere so you need to go back and check where you have made the mistake so let's check we're now going to add the one thousand four hundred and seventy one ran plus the forty ran minus the eight hundred and eighty rand and it has to give us the same one as sixty thousand six hundred and thirty one rank and we will we will have done everything correctly so what does it give us here it gives us the sixty thousand six hundred and thirty one rent if you calculated it as well and that is the corrected that has list total at the end of the month meaning 31 may 2020 and you can see the total balance in our debtors control account is the same as the total balance in our debtors list total and i hope you have followed along well i hope you're able to see how we reconcile our data control account to our letters list and see how we do every item together if you have gained value from this lesson please subscribe to our channel like this video and share it to those who think it might help till next time cheers uh