CONTROL ACCOUNTS

1. Marian is a trader. She does not operate a full double entry system but she does keep
books of prime entry from which control accounts are prepared.

REQUIRED
a) Define control account [2]
b) Explain any two benefits to Brown for preparing control accounts. [2]

Additional information
The following information relates to the year ended 31 December 2024.
$
Sales ledger debit balances, 1 January 2024 14 500
Sales ledger debit balances 31 December 2024 17 000
Receipts from trade receivables 92 000
Sales ledger balances set off against purchases ledger balances 10 000
Interest on overdue on trade receivables accounts 11 000
Purchases for the year 49 000
Credit notes 7 400
Cash discount allowed to trade receivables 8 400
Cash sales 50 000
Office computers 24 000
Bad debts written off 4 000
Cash refunds to trade receivables 11 500

REQUIRED
c) Sales ledger control account for the year 31 December 2024, showing clearly the
credit sales for the year. [5]

Additional information
1) The inventory at 1 January 2024 was valued at $12 400 and inventory at 31 December
2024 was valued at $13 000.
2) The following payments were made during the year through bank transfer.
$
Carriage inwards 9 400
Postage and stationery 4 500
Rent and rates 7 000
Office computers 9 000
3) On 31 December 2024, computers were valued at $25 000.
4) Goods sent on return basis with a selling price of $21 000 had been included in the
sales day book. Half of the goods were already sold by the credit customer on 31
December 2024. The credit customer has not yet indicated that is willing to buy the
goods. The goods were supplied at a mark-up of 25%.

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 REQUIRED
d) Statement of profit or loss for the year ended 31 December 2024. [7]
2. Gaffer Ltd maintains control accounts in their general ledger. The following information
was obtained from the books of the company for the month of May 2024.
$
1 May 2024 Trade receivables 14 000
Trade payables 27 500
31 May 2024
Credit sales 98 000
Credit purchases at list price 72 000
Purchases returns at list price 12 000
Sales returns 13 000
Cash and cheques received from trade receivables 74 000
Cash and cheques paid to suppliers 67 000
Discount received 7 500
Discount allowed 8 000
Interest charged to customers on overdue accounts 9 700
Bad debts written off 4 900
Sales ledger balance set off against balance in the Purchases ledger 15 000
Cash refunds from suppliers for overpayments 13 500
Debit balances in Purchases ledger 4 000
Credit balances in Sales ledger 4 500

Additional information
All purchases and purchases returns were subject to a trade discount of 20%.

REQUIRED
a) Prepare sales ledger control account for the month of May 2024 [5]
b) Prepare purchases ledger control account for the month of May 2024. [4]

Additional information
The company’s finance manager want to create provision for doubtful debts on the
company trade receivables. He is not sure about factors that are taken into account when
determining the percentage for provision for doubtful debts.

REQUIRED
c) Identify any three factors considered when estimating provision for doubtful debts.
[3]
d) Explain the difference between general and specific provision for doubtful debts. [4]

Additional information

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 Tobaiwa, a major trade receivable of the company, owing $5 000, was declared bankrupt
on 28 June 2024. On the last day of the same month, Laston, a trade receivable owing $3
000 was written off as bad debt.

REQUIRED
e) Suggest any three ways Gaffer Ltd have to do in order to reduce bad debts. [3]
3. Alexio Ltd maintains control accounts. At the end of the financial year, the sales ledger
control account debit balance of $109 440 did not agree with the total of balances
extracted from the sales ledger. The sales ledger balances had a total of $85 210.
Subsequently the following errors were later discovered.
1) The sales day book had been undercast by $5 070.
2) The return of goods sold on credit worth $10 000 had been omitted from the books.
3) The debit balance of a trade receivable’s account, $18 400, had been set off against a
balance in the Purchases ledger. No adjustment had been made for this in the sales
ledger control account.
4) A sales invoice to Alice for $4 500 had been posted to the account of Alister.
5) The receipt of $9 450 cash from W. Wood had been treated as a payment from P.
Wood, a trade receivable. The amount received related to the cash sale of an old office
computers which the business no longer uses.
6) A debit balance of $10 900 had been omitted from the list of trade receivables.

REQUIRED
a) Prepare an amended sales ledger control account. [7]
b) Prepare a statement amending the total of the sales ledger balances. [7]
c) Distinguish between sales ledger account and sales ledger control account. [2]
4. At the end of the financial year of Ambrose Ltd, the purchases ledger control account
indicated a credited balance of $172 472 and schedule of trade payables in the ledger
indicated a total of $139 036. Further examinations were made by the accountant and the
following errors were discovered.
1) A purchase invoice for $19 999 had been completely omitted from the books.
2) Discount received of $9 109 had been correctly entered in the cash book but omitted in
the trade payables account in the ledger.
3) A credit balance of $15 000 in the Purchases ledger had been set off against a sales
ledger debit balance, but no entry had been made in the control account.
4) The total purchase returns journal had been undercast by $12 945.
5) An invoice for $12 500 received a supplier had been correctly entered in the purchases
journal but had been entered in the trade payables account as $15 200.
6) A credit balance of $17 300 had been omitted from the schedule of trade payables.

REQUIRED
a) An amended purchases ledger control account. [5]
b) Draw up statement reconciling the amended purchases ledger control account balance
with the total of the Purchases ledger. [5]

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 c) Explain the meaning of contra entries and their treatment in the control accounts. [4]
5. ABC PLC maintains control accounts. The following information is available for the year
endedn31 December 2024.

$
Sales ledger balances 72 440
Cash sales 42 500
Credit sales 174 995
Interest charged on overdue trade receivables accounts 13 773
Bad debts irrecoverable 15 911
Discount allowed to trade receivables 15 900
Cash refunds to trade receivables 13 000
Discount allowed to cash customers 10 000
Accounts settled by contra 16 000
Sales returns journal 13 950
Receipts from trade receivables 144 000
Provision for doubtful debts 7 000

REQUIRED
a) Sales ledger control account for the year ended 31 December 2024. [5]

Additional information
The total of the sales ledger balances on 31 December 2024 amounted to $34 207 does
not agree with the sales ledger control account closing balance. After investigations, the
following errors were discovered:
1) Cash sales of $19 440 had been recorded in the sales ledger control account.
2) The total of discount allowed column in the cash book had been overstated by $7
300.
3) A trade receivable who owed the business $11 990 had been declared bankrupt. This
had been correctly entered in control, but no entry had been made to cancel the debit
entry in trade receivable’s personal account.
4) Alex was both a trade payable and a trade receivable. He had a balance of $19 000 in
the sales ledger and a balance of $14 000 in the Purchases ledger. The contra entry
had been made in the personal ledger account but no entry had been made in the sales
ledger control account.
5) Goods with a selling price of $4 000 has been sent on sale or return basis to Hilder, a
credit customer. The transaction has been entered in the sales day book. The credit
customer has not yet indicated that his intention to purchase the goods.
6) A dishonoured cheque of $10 000 had been correctly recorded in the cash book but
had been posted to the credit side of the trade receivable’s account.
7) Interest charged on trade receivable, $7 500, had not been recorded in the books of
account.

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 REQUIRED
b) A corrected sales ledger control account. [6]
c) A statement amending the sales ledger control account balance and the schedule of
sales ledger balances. [4]
d) Explain why provision for doubtful debts are excluded in the sales ledger control
account. [2]
6. The following information has been extracted from the accounts of Agrippa for the year
ended 31 July 2024.
$
Purchases ledger balances at 1 July 2024 29 000
Credit purchases 214 150
Cash purchases 75 000
Purchases returns 11 500
Cheques and cash paid to suppliers 198 000
Suppliers’ dishonoured cheques 19 500
Contra entries 25 000
Discount received from suppliers 47 300
Petty cash paid to suppliers 17 000

REQUIRED
a) Purchases ledger control account for the month. [4]

Additional information
A purchases ledger control account balance did not agree with a schedule of trade
suppliers which had a total of $3 250. The following errors were later discovered by the
accountant.
1) Cash purchases, $19 000, had been recorded in the purchases ledger control account.
2) A purchase invoice of $12 400 had been correctly recorded in the purchases journal,
but had not been posted to the supplier’s ledger account.
3) Discount allowed, $11 200, had been credited in the purchases ledger control account.
4) A credit balance $2 500 on the account of a supplier had been omitted from schedule
of trade suppliers.
5) A purchases ledger account had been understated by $4 000.
6) A credit balance of $11 000 in the purchases ledger had been set-off against the debit
balance in the sales ledger, but no entry had been made in the purchases ledger control
account.
7) A payment of $12 900 had been debited to purchases ledger account but had been
omitted in the cash book.

REQUIRED
b) Amended purchases ledger control account. [5]
c) A reconciliation statement of the purchases ledger control account with a schedule of
trade suppliers. [5]

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 d) Explain the difference between purchases ledger account and purchases ledger control
account. [4]
7. The following balances were extracted from the books of Khumalo Ltd at 31 July 2024.
$
Sales ledger balances, 1 July 2024 12 950 Dr
1 450 Cr
Purchases ledger balances, 1 July 2024 4 990 Dr
15 950 Cr
31 July 2024
Purchases day book 149 950
Sales day book 295 400
Sales returns day book 13 459
Purchases returns day book 14 995
Cash book
: discount allowed 13 400
: discount received 15 100
: Cash sales 92 000
: Cash purchases 75 000
: Payments to trade payables 131 400
: Receipts from trade receivables 195 500
: Refunds to trade receivables 10 500
General journal
: Bad debts written off 12 300
: Interest on overdue on trade receivables 18 900
: Interest on overdue on trade payables 21 450
: Accounts settled by contra 30 000

REQUIRED
a) Sales ledger control account. [5]
b) Purchases ledger control account [5]

Additional information
After preparation of the control account, the purchases ledger control account balance did
not agree with the schedule of trade payables which had a total credit balances of $34
698. The following errors were later discovered.
1) Purchases journal had been understated by $7 230.
2) Cash purchases $9 500 had been credited to the trade payables account.
3) An amount of $13 900 to Agrippa, a supplier, has been set-off against their account
in the sales ledger, but no entry has been made in the purchases ledger control
account.
4) An invoice in the purchases journal for $9 300 had been entered in the Purchases
ledger as $9 003.
5) Credit purchases from Asaph Ltd worth $12 400 had been posted to Asa Ltd.

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 6) The discount received of $15 000 had been correctly entered in the cash book, and
credited in the supplier’s ledger account.
7) A payment to trade suppliers, $14 500, had been correctly entered in the supplier’s
account but had been debited in the cash book.
8) A credit balance of $9 000 had been omitted from the list of trade suppliers.
9) Cash purchases of $19 300 had been recorded in the cash book as paid to trade
suppliers.

REQUIRED
c) An amended purchases ledger control account. [5]
d) Revised purchases ledger balances. [5]
e) Suggest any three possible causes of a debit balance in the Purchases ledger control
account. [2]
8. Chambe, a trader maintains control account. The following account prepared by
inexperienced bookkeeper, appeared in his books on 31 October 2024.

Sales ledger control account

$ $
Balance b/d 10 950 Cash and bank 100 000
Credit sales 309 909 Discount allowed 19 541
Refunds 10 990 Bad debts 31 334
Cash sales 1 000 Provision for doubtful debts 300
Contra entries 19 000
Sales returns 15 910
_______ Balance c/d 146 764
332 849 332 849

Balance b/d 146 064

The sales ledger control account did not agree with trade receivables ledger balances.
Trade receivables ledger had total debit balances of $147 864. After investigations, the
following errors were discovered.
1) Cash sales of $8 400 had been recorded in the books as cash received from trade
receivables.
2) A credit notes issued to trade receivables, $8 900, had been completely omitted from
the books.
3) Goods costing $10 000 had been sent on sale or return basis to a credit customer. The
goods were supplied at a margin of 20%. The transaction had been included in the
sales day book. The credit customer has not yet indicated that is willing to buy the
goods.
4) Cash received from trade receivables entered in the control account included $4 100 in
respect of a debt which had previously been written off.

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 5) Discount allowed, $9 500, had been correctly entered in the cash book, but had been
posted to the trade payable account as discount received.
6) A trade receivable, Luke, paid $13 400 on account. This amount had been correctly
entered in the cash book, but had been debited to Luke’s account as $14 300.
7) The balance of trade receivable’s account, $13 500, had been set-off against a balance
in the Purchases ledger. No adjustment had been made for this sales ledger control
account.
8) A receipt of $13 000 from Peter, a trade receivable, had been treated as a refund from
Agrippa, a supplier.

REQUIRED
a) Corrected the sales ledger control account prepared by inexperienced bookkeeper. [5]
b) Prepare an amended sales ledger control account for the month. [7]
c) Reconcile the sales ledger total with the new control account balance. [7]
d) Explain the reason why provision for doubtful debts and cash sales are not included in
the sales ledger control account. [4]
9. Dhlodhlo Ltd is financial year ended on 30 June 2024. On 1 July 2023 the following
balances existed as brought forward.

Debit Credit
$ $
Trade receivables 5 000 250
Trade payables 300 3 000

The following information for the financial year ended 30 June 2024 derived from books
of original entry was provided;

$
Sales: Cash 7 000
: Credit 5 000
Purchases: Cash 3 000
: Credit 1 500
Bad debts (irrecoverable debts) 400
Discount allowed for cash customers 70
Discount allowed for credit customers 40
Discount received from cash suppliers 30
Discount received from credit suppliers 20
Cash refund to cash customers 100
Total receipts from all customers 10 200
Total payments to all suppliers 3 900
Set off between sales ledger and purchases ledger 80
Sales returns from credit customers 45

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 Purchases returns to credit suppliers 25
Increase in allowance for doubtful debts 60
Sales ledger credit balances 125
Purchases ledger debit balances 55

REQUIRED
a) Prepare a sales ledger control account and a purchases ledger control account for the
year ended 30 June 2024.

Additional information
The trade receivables schedule extracted from the sales ledger showed a total of $7 441
debit and $150 credit and the trade payables schedule extracted from the Purchases ledger
showed a total of $3 170 credit and $68 debit. An investigation revealed the following
errors:
1) Solani, a trader receivable had a debit balance of $25 in the sales edger but this was
taken as a credit balance at a year end.
2) No entry had been made in the books for interest payable by a trade receivable, $15,
due to overdue debts.
3) A credit note received by Dhlodhlo Ltd from Zax wholesalers $105 had been recorded
in the correct returns journal only.
4) The purchases day book had been overcast by $175.
5) A trade discount of $10 on goods bought on credit from a supplier had been correctly
deducted on the purchases invoice but it was included in the total of discount received.
6) Goods sold on credit for $35, had been recorded correctly in the trade receivable
account but recorded as $53 in the sales journal.
7) The total of the discount allowed column in the cash book had been undercast by $26.
8) Que supplies, a trade payable with a debit balance in the Purchases ledger had been
correctly recorded in the cash book only.
9) A credit supplier had been paid $12 by petty cash but the petty cash voucher had been
misplaced.
10) A proforma invoice for goods taken on sale or return basis, $85, had been treated as a
sales invoice.

REQUIRED
b) Prepare a corrected sales ledger control account and a statement to reconcile the
schedule of trade receivables to the sales ledger control. [7]
c) prepare a corrected purchases ledger control account and a statement to reconcile the
schedule of the trade payables to the Purchases ledger control. [7]
d) An extracted of the statement of financial position as at 30 June 2024, after all errors
had been corrected. [6]
e) Suggest any three possible causes of a credit balance in the sales ledger control
account. [3]

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