Control Accounts

Creditors & Debtors Control Accounts

 The purpose

The control accounts act as a trial balance for

your debtor’s (accounts receivable) and
creditor’s (accounts payable) accounts.
 Types of control accounts

a.) Sales Debtors (Account Receivable) Control

Account
b.) Purchases Creditors (Accounts Payable)
Control Account
 Sales Ledger (Debtors or accounts Receivable)
Control Account
The sales ledger records the information relating to ALL
debtors or account receivables into ONE SINGLE ACCOUNT.

Since the debtor is located on the debit side, anything

that will increase the amount owed by them WILL BE
RECORDED ON THE DEBIT SIDE and anything that will
decrease the amount owed by them WILL BE
RECORDED ON THE CREDIT SIDE.

It is one method of internal control used by a business.

 Example 1

Sales Ledger (Debtors)

Date Particular (+) Amount Date Particular (-) Amount

Peter Lake a/c

July 1 Balance b/d 600 July 3 Return-in 50
July 5 Sales 400 July 15 Cash 125
July 31 Balance c/d 825
1000 1000
Also:

Date Particular Amount Date Particular Amount

Diana Sims a/c

July 1 Balance b/d 415 July 1 Balance b/d* 20
July 10 Sales 300 July 8 Cash 200

July 8 Discount allowed 40

July 20 Bank 100

July 31 Balance c/d 355

715 715

*Can be owed by the business to the debtor for an overpayment.

 Sales Ledger (Debtors) Control A/c
Date Particular Amount Date Particular Amount
July 1 Balance b/d 1015 July 1 Balance b/d* 20
Sales 700 Return-inwards 50
Cash 325
Discount allowed 40
Bank 100
July 31 Balance c/d 1180
(debit balance)
1715 1715
August 1 Balance b/d 1180

*Can be owed by the business to the debtor for an overpayment.

 Sales Ledger (Debtors) Control A/c
(FORMAT)
Date Particular (+) Amount Date Particular (-) Amount
Balance b/d xx Balance b/d* xx
(Debit balance) (Credit balance)
Sales xx Return-inwards xx
Late fees xx Cash xx
Dishonoured xx Discount allowed xx
cheques
Bank xx
Set off to purchases xx
ledger (Cancel debt)
Balance c/d xx Balance c/d xx
(Credit balance) (debit balance)
XX XX
Balance b/d

*Can be owed by the business to the debtor for an overpayment.

 Practice question

1. S. Melon maintains a self-balancing ledger system. From the

following information, prepare the sales ledger control account
for the month of January 2018:

Debit balance on January 1 $33, 490

Credit balance on January 1 155
Sales during the month 65,884
Cash received from customers 53,861
Discount allowed 4,580
Returns from customers 2,314
Bad debts 890
Credit balance on January 31 63
 Purchases (Creditors or accounts payable)
Control Account
The purchases ledger records the information relating to
ALL creditors or account payables into ONE SINGLE
ACCOUNT.

Since the creditor is located on the credit side, anything

that will increase the amount owed by them WILL BE
RECORDED ON THE CREDIT SIDE and anything that will
decrease the amount owed by them WILL BE
RECORDED ON THE DEBIT SIDE.

It is one method of internal control used by a business.

 Example 2

Purchases Ledger (Creditors)

Date Particular (-) Amount Date Particular (+) Amount

Josh May a/c

May 15 Bank 1300 May 1 Balance b/d 2,100
(Credit balance)
May 15 Discount allowed 75 May 5 Purchases 825
May 31 Balance c/d 1,550
(Credit balance)
2,925 2,925
June 1 Balance b/d 1,550
Also:
Date Particular Amount Date Particular Amount

Jazz Lion a/c

May 1 Balance b/d* 60 May 1 Balance b/d 1,620
(Debit balance) (Credit balance)
May 6 Return-out 45 May 4 Purchases 1,100

May 12 Cash 390

May 24 Set off against 105

sales ledger
(Cancel debt)
May 31 Balance c/d 2,120
(Credit balance)
2,720 2,720

June 1 Balance b/d 2,120

*Can be owed by the business to the debtor for an overpayment.

 Purchases Ledger (Creditors) Control A/c
Date Particular Amount Date Particular Amount
May 1 Balance b/d* 60 May 1 Balance b/d 3,720
(Debit balance) (Credit balance)
Bank 1,300 Purchases 1,925
Discount received 75
Return-out 45
Cash 390
Set off 105
May 31 Balance c/d 3,670
(Credit balance)
1715 5,645
June 1 Balance b/d 3,670
*Can be owed by the business to the debtor for an overpayment.
 Purchases Ledger (Creditors) Control A/c
(FORMAT)
Date Particular (-) Amount Date Particular (+) Amount
Balance b/d* xx Balance b/d xx
(Debit balance) (Credit balance)
Bank xx Purchases xx
Discount received xx
Return-out xx
Cash xx
Set off xx
Balance c/d
(Credit balance)
xx xx

*Can be owed by the business to the debtor for an overpayment.

 Practice question

2. From the following information, prepare the purchases

control ledger control of Marcy Melfried for the month of
July 2017:

Credit balance on July 1 $84,902

Purchases for the month 72,466
Return-out 6,339
Cheques paid to creditors 78,885
Discount received 7,539
Sales ledger transferred to purchases
Ledger 322
 Practice question

3. Using the following provided below, prepare the:

a. Sales ledger control account
b. Purchases ledger control account

April 1 Credit balance in purchases ledger $7,868

Debit balance in purchases ledger 48
Debit balance in sales ledger 6,742
Credit balance in sales ledger 67
Purchases for the month 44,394
Sales for the month 50,048
Sales returns 3,284
Purchases returns 2,166
Receipts from debtors 49,668
Payments to creditors 45,612
Bad debts written off 846
Interest charged on late debtors 914

April 30 Sales ledger debits transferred to

purchases ledger $105
Credit balance in sales ledger $79
Debit balance in purchases ledger $104