Credit Balance in
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.