sales ledger control account: - is an account summarizing all the accounts of the trade receivables.
purchases ledger control account: - is an account summarizing all the accounts of the trade payables.
Contra entries: -it may be referred to as inter ledger transfers or set-off s and are when a transfer is
made from an account in the sales ledger to an account of the same business/person in the purchases
ledger.
Advantages of control accounts
1) They can assist in locating errors when the trial balance fails to balance.
2) They are proof of the arithmetical accuracy of the ledgers they control.
3) The balances on these accounts are regarded as being equal to the total of the trade
receivables and the total of the trade payables, so this information is available immediately.
4) Draft financial statements can be prepared quickly because of the balances provided by
the control accounts.
5) They help to reduce fraud as the control accounts are prepared by someone who has not
been involved in making the entries in those particular ledgers.
6) They provide a summary of the transactions affecting the trade receivables and trade
payables for each financial period.
Sales ledger control account
Date Details $ Date Details $
Balance b/d (Dr.)(Normal) XXX Balance b/d (Cr.) XXX
Sales XXX Cash/bank XXX
Interest on over due XXX Discount allowed XXX
Cheque dishonors XXX Sales return XXX
Refund to customer XXX Bad debts XXX
Set off (purchase ledger) XXX
Balance c/d(Cr.) XXX Balance c/d(Dr.) (Normal) XXX
XXX XXX
Purchase ledger account
Date Details $ Date Details $
1 jan 17 Balance b/d (Dr.) XXX Balance b/d (Cr.) (Normal) XXX
Cash / bank XXX Purchase XXX
Purchase returns XXX Interest on overdue amount XXX
Discount received XXX Refund from supplier
Set off (sales ledger) XXX
Balance c/d(Cr.)(Normal) XXX Balance c/d(Dr.) XXX
XXX XXX
NOTE:-
1)Cash Sale and cash Purchases will not be written in control Accounts.
2)Cash sale and Cash Purchases payment received and paid will not be written in control Account
3)Allowance for doubtful debts will not be written in control accounts.
Q1 You are required to prepare a sales ledger control account from the following information for the
month of November 2014
Nov 1 Sales ledger balances 36,000
Totals for November:
Sales day book 21,000
Returns inwards day book 1,500
Cheques and cash received from Customers. 27,000
Discounts allowed 1,000
Nov 30 Sales ledger balances 27,500
Q2 A You are required to prepare a purchases ledger control account from the following information for
the month of April. The balance of the account is to be taken as the amount of accounts payable as on
30 April.2015
April 1 Purchases ledger balances 19,600
Totals for April:
Purchases day book 9,400
Returns outwards day book 620
Cheques paid to suppliers 12,800
Discounts received from suppliers 1,140
30 Purchases ledger balances ?
Q3 Prepare a sales ledger control account from the following information:
2016
March 1 Debit balances 18,000
Totals for March:
Sales day book 14,000
Cash and cheques received from debtors 16,000
Discounts allowed 1,400
Debit balances in the sales ledger set off against credit 120
balances in the purchase’s ledger
31 Debit balances DR. ?
Credit balances 60
Q4 Prepare a sales ledger control account from the following information for October 2016, carrying
down the balance at 31 October 2016
Oct 1 Sales ledger balances 28,409
31-Sales day book 26,617
Bad debts written off 342
Cheques received from debtors 24,293
Discounts allowed 416
Cheques dishonored 120
Returns inwards 924
Set-offs against balances in purchases ledger 319
Q5 The trial balance of Outsize Books Ltd revealed a difference in the books. In order that the
error(s) could be located it was decided to prepare purchases and sales ledger control accounts.
From the following information prepare the control accounts and show where an error may
have been made 01 Jan 2015
$
Purchases ledger balances 19,420
Sales ledger balances 28,227
Totals for the year 2015
Purchases journal 210,416
Sales journal 305,824
Returns outwards journal 1,452
Returns inwards journal 3,618
Cheques paid to suppliers 205,419
Petty cash paid to suppliers 62
Cheques and cash received from customers 287,317
Discounts allowed 4,102
Discounts received 1,721
Balances on the sales ledger set off against
balances in the purchase’s ledger 640
Dec 31 The list of balances from the purchase’s ledger shows a total of £20,210
and that from the sales ledger a total of £38,374
Q6 From the following figures, compile accounts receivable ledger(sales ledger) and accounts payable
ledger(Purchase ledger) control accounts for the month, and ascertain what the net balances of the
respective ledgers should be on 31 January 2017.Balances on 1 January 2017
$
Accounts receivable ledger - Dr 46,462
Cr 245
Accounts payable ledger - Dr 1,472
Cr 25,465
Total for the month to 31 January 2017
Purchases 76,474
Sales 126,024
Purchase returns 2,154
Accounts receivable settled by contra accounts
with accounts payable 455
Bad debt written off 1,253
Discounts and allowances to customers 746
Cash received from customers 120,464
Cash discount received 1,942
Cash paid to creditors 70,476
Cash paid to customers 52
