A contra entry of £400 is agreed to offset a balance in the purchases ledger against the sales ledger. Select the correct journal entry.

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Multiple choice — select the best answer

ADr PLCA £400, Cr Bank £400
BDr Sales £400, Cr Purchases £400
CDr Purchases £400, Cr Sales £400
DDr PLCA £400, Cr SLCA £400
EDr SLCA £400, Cr PLCA £400

✓ Correct answer: D. Dr PLCA £400, Cr SLCA £400 Contras reduce both balances. PLCA is a liability (debit to decrease). SLCA is an asset (credit to decrease).

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A contra entry of £400 is agreed to offset a balance in the purchases ledger against the sales ledger. Select the correct journal entry.

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