Credit Balance in
Purchases Ledger?

Q: I was solving an exercise of control accounts in which one of the transactions given was this:

Credit balance in purchases ledger transferred from sales ledger. The amount was 810.

So I am confused whether it is a contra entry or what? Please explain.

A:
I would have to see the full question or exercise to see exactly what it was asking for. But I will give you my best idea without seeing the full question/exercise.

This is probably an exercise where you have to do journal entries. For the transaction above I don't think this is a contra entry. I think it's an error and that you now have to do a correcting entry. The correction would be to transfer the credit balance that is incorrectly in the purchases ledger back to the sales ledger (where it belongs).

The journal entry for this would be:

Dr Purchases 810
Cr Sales 810


Anyone else see a question like this or can try answer this? Leave us your comments below.

Best,
Michael Celender

Comments for Credit Balance in
Purchases Ledger?

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Credit balance in the Purchases Ledger Control Account
by: Anonymous

I was looking in my revision book and it stated that "balance carried down" on the credit side of the purchases control account was "schedule of trade receivables from the purchases ledger." I don’t know if I’m overly tired or if this is actually confusing. Is this correct? Please help.

Actually, this is pretty confusing to me too. I don't know how there would be a credit balance in the purchases ledger that was then transferred to the purchases control account.

The purchases account or purchases ledger generally has a debit balance - as purchases are an expense.

Also, trade receivables are an asset and so also have a debit balance.

The contra entry to purchases is generally trade payables or creditors (same thing) - this is people you owe money to (you owe the suppliers for purchases). Trade payables are a liability account and so would have a credit balance, but trade receivables is an asset account and would have a debit balance.

If there is a credit balance in the purchases ledger, this is some weird error - maybe an error in transferring from the sales ledger, which normally has a credit balance.

Hope that helps a bit.

Best,
Michael C.
Founder of Accounting Basics for Students

Q
by: Anonymous

I was solving a question and had the transaction motor vehicle accepted as payment from a customer

Debit balances in creditors ledger control account
by: Anonymous

Why does a creditors ledger control account sometimes have a debit balances (reasons)?

Rise of a Credit Balance in the Control Account
by: Allan Gee

A credit balance in the control account may be due to an overpayment by our business to our supplier.

Answer
by: Anonymous

It is a set off.
Dr purchases 810
Cr sales 810

Sales ledger control account, purchase ledger control account and statement of financial position
by: Anonymous

To prepare sales ledger control account and purchases ledger control account and statement of financial position:

1-credit balance on purchase ledger transferred to sale ledger ...amount 998
2- soliciters fee for debit collection. This is charged to customer's account ...amount 550
3- motor vehicle accepted as payment of customer's account ...amount 3500

Good post
by: Ceasar Block

Hello! Your site is awesome!

i didn't get answer for the question
by: yeboah

i didn't get answer for the question that was asked saying that" i was solving question and i came across debit balance transfer from the creditor to the debtor ledger"

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