Question 3 The opening balances on 1 January in the books of Gladstone Ltd included the following: Purchase Ledger Control Account 313,800 Sales Ledger Control Account 530,800 During the year to 31 December, the following transactions took place: Credit Sales Cash Sales Credit Purchases Cash Purchases Amounts received from Debtors Amounts paid to Creditors Returns to Creditors Returns by Debtors Discounts Allowed Discounts Received 2,496,400 500,600 1,712,000 12,800 2,712,800 1,285,000 5,000 12,720 2,480 1,800 Required: (a) Write up the Purchase Ledger Control account and the Sales Ledger Control account for the year. Balance off the two accounts at the year end. (8 marks) (b) After the accounts had been prepared, it was discovered that the Purchase ledger control account did not reconcile with the total of the individual balances in the Purchase ledger which was 731,500. The following errors in the control account were subsequently found. Make the necessary amendments to the control account to reconcile with the above balance. (0) Goods purchased for 1,000 had been returned to the supplier. The supplier account had been correctly updated, but no posting has been made to the control account. The purchases day book had been undercast by 2,000. (ii) A contra entry had been agreed with a supplier who is also a customer to write off 3,500. The contra has not yet been entered in the control accounts. (Do not make the sales ledger control adjustment) (4 marks) (c) Explain the function of the control accounts (4 marks) (Total 16 marks)