Control Accounts

Control Accounts are the total accounts used for checking the arithmetical accuracy of each of ledger
separately. A control account contains the same information as the individual ledger accounts which it
controls, but in total.
Purposes of control accounts
1. To act as a check on the accuracy of the totals of the balances in the sales and purchases
ledgers.
2. To provide totals of debtors and creditors quickly when a trial balance is being prepared.
3. To identify the ledger(s) in which errors have been made when there is a difference on the trial
balance.
4. To act as an internal check on the work of the sales and purchases ledger clerks to detect
errors and deter fraud, under the charge of a responsible person
Set off / contra entries. Sometimes, the same person may be a debtor as well as a creditor for the
business. At the end of the month, the smaller amount in his account from one ledger is transferred to
his account in the ledger with large amount. The entry passed for recording this transfer is known as set
off or contra entry.
Key Points
Control accounts are considered as total accounts.
Debtors ledger control account is also known as sales ledger control account or total debtors
account.
CredlLors ledger conLrol accounL ls also known as purchases ledger conLrol accounL or LoLal
creditors account.
Balance in sales ledger control account is the balance of debtors at the year end and balance in
purchases ledger control account is balance of creditors.
Cash sales and cash purchases are not recorded in the control accounts.
The double entry to record set off from purchase ledger to sales ledger is to debit purchase
ledger control account and credit sales ledger control account.
Dishonoured cheque which was received from debtors is shown in the debit side of the sales
ledger control account.
Interest on overdue accounts charged from customers and refunds to customers for
overpayments by them are shown on the debit side of sales ledger control account.
Interest charged by suppliers and refunds received from suppliers for overpayments to them are
recorded in the credit side of purchases ledger control account.
Provision for bad debts is not included in sales ledger control account
Small balance in a control account represents advance payments, overpayments etc.
Sources of information for items appearing in the sales ledger control account
1. Credit sales- sales day book total.
2. Returned cheques (unpaid cheques) cash book- payments side/ bank statement.
3. Interest charged to debtors- Interest received account.
4. Cash or cheques from debtors cash book-receipts side.
5. Discount allowed cash book (debit side) or discount allowed account.
6. Sales returns sales returns day book total.
7. Bad debts written off general journal or bad debts account.
8. Set off or contra entries- general journal.
The format of sales ledger control account

Sources of information for items appearing in the sales ledger control account
1. Credit sales- sales day book total.
2. Returned cheques (unpaid cheques) cash book- payments side/ bank statement.
3. Interest charged to debtors- Interest received account.
4. Cash or cheques from debtors cash book-receipts side.
5. Discount allowed cash book (debit side) or discount allowed account.
6. Sales returns sales returns day book total.
7. Bad debts written off general journal or bad debts account.
8. Set off or contra entries- general journal.
Format of purchase ledger control account

Control Account Questions:
Q1.The following balances have been extracted from the books of a business on 31 may 2006 Prepare
the Sales Ledger control account $
Opening Debtors 6 000
Receipts from debtors 11 400
Discounts allowed 600
Returns Inwards 500
Bad debts written off 500
Set off from purchase ledger 1 000
Credit sales of goods 15 000
Credit balances on 31 May 2006 200
Dishonored cheques 100
Interest charged from debtors 100
Cash refunds to customers 50

Q2.The following balances have been extracted from the books of a business on 31 may 2006 Prepare
the Sales Ledger control account $
Opening Debtors 10 000
Receipts from debtors 21 500
Discounts allowed 500
Returns Inwards 300
Bad debts written off 100
Set off from purchase ledger 800
Credit sales of goods 25 000
Credit balances on 31 May 2006 300
Dishonored cheques 1000
Interest charged from debtors 200
Cash refunds to customers 100
Q3. The following balances have been extracted from the books of a business that uses control
accounts. The business makes up the control accounts on 31 may 2006.Prepare the Purchases Ledger
Control Account
$
Opening Creditors 4 000
Payments to creditors 7 600
Discounts received 400
Purchases returns 500
Set off from Sales Ledger 1 000
Interest charged by suppliers 200
Cash refunds from suppliers 100
Credit Purchases 12 000

Q4.The following balances have been extracted from the books of a business that uses control accounts.
The business makes up the control accounts on 31 may 2006. Prepare the Purchases Ledger Control
Account
$
Opening Creditors 6 000
Payments to creditors 10 400
Discounts received 600
Purchases returns 750
Set off from Sales Ledger 1 500
Interest charged by suppliers 300
Cash refunds from suppliers 150
Credit Purchases 18 000
Q5. The following details are available from the books of Weston for the month of May,
2003.Prepare Sales ledger control account and Purchases ledger control account.
$
Opening debtors 4 000
Opening creditors 3 800
Cash received from debtors 8 000
Cheques received from debtors 60 000
Cheques paid to creditors 55 000
Cash paid to creditors 7 000
Bad debts written off during the year 750
Discount allowed 1 250
Discount received 1 000
Returns inwards 800
Returns outwards 500
Transfer from purchases ledger to sales ledger 500
Credit sales 80 000
Credit purchases 71 000

Q6. From the following information prepare the sales ledger control account and purchases ledger
control account. $
Opening debtors 12 000
Opening creditors 8 000
Credit sales 30 000
Credit purchases 25 000
Returns inwards 500
Returns outwards 800
Discounts allowed 1 000
Discounts received 300
Bad debts written off 200
Cash paid to creditors 2 500
Cheques paid to creditors 20 000
Cheques received from debtors 25 000
Cash received from debtors 4 500
Customers cheques returned unpaid 1 000
Set off from sales ledger to purchases ledger 600

Q7. The following details are available from the books of Mathews for the month of June, 2003.
Prepare the sales ledger control account and purchases ledger control account for the month of June,
2003. $
Sales ledger control account balance b/d 10 000
Purchases ledger control account balance b/d 8 000
Purchases for the month 12 000
Sales for the month 16 000
Returns inwards 1 000
Returns outwards 400
Payments to creditors 11 000
Receipts from debtors 15 000
CusLomers cheques reLurned unpald 500
Bad debts written off 300
Discount received 550
Discount allowed 750
Transfer from purchases ledger to sales ledger 600
Credit balance in sales ledger control account 600
Debit balance in purchases ledger control account 200

Q 10. The following information is relating to the business of Anson for the month ended 31
st
March
2003:-
Credit sales and return inwards are subject to 10% trade discount on list price.
1
st
March 2003 Debtors 4,000
Creditors 2,000
31 March Credit sales at list price 2,00,00
Cash sales 5,000
Returns inwards at list price 1,500
Credit purchases 12,000
Discount allowed 1,500
Discount received 1,400
CusLomers cheque reLurned by bank wlLh remarks of
lnsufflclenL funds"
900
Interest charged on overdue debts 250
Return outwards 750
Cheques paid to suppliers 7,000
Cheques and cash received from credit customers 15,000
Credit balance in sales ledger 300
Bad debts written off 600

Required:-
1. Make sales ledger control accounts of Mr. Ibrahim for the month of March 2003.
2. Calculate total Turn over on 31
st
March 2003
Q11. The following information was obtained from the books of K. Vasanthi.
$
1
st
April 2003 Trade debtors 19,012
Trade creditors 5,160
Stock in trade 15,000
31
st
March 2004 Credit sales 40,690
Credit purchase at list price* 14,400
Purchase return at list price* 400
Sales return 240
Cash and cheque received from debtors 39,160
Customers cheque dishonored 500
Cash and cheque paid to suppliers 10,340
Discount received 380
Discount allowed 420
Interest charged to customers on Overdue accounts 140
Bad debts written off 310
Balance in the sales ledger set off against balance in
the purchase ledger
700
Cash refunds from suppliers for over payments 120
Debit balance in purchase ledger 80
Credit balance in sales ledger 124
Overdue interest charged by our suppliers 260
Cash refunds for over payments made by customers 360
*All purchases and purchase returns were subject to a trade discount of 20%off the list price. During the
year cash sales were $ 22 000 and cash purchase were $ 12,500.
*On 31
st
March 2004 the stock in trade was valued at $ 12,500.
Required:-
1. Total Debtors Account for the year ended 31
st
March 2004
2. Total Creditors Account for the year ended 31
st
March 2004.
3. c. Calculate the Gross profit of the business for the year ended 31
st
march 2004.

Q12. The following details are available from the books of a business for the year ended 31
st
December
2002:- $
On 1-1-2000 The balance in the provision for bad debts account $ 400
On 31-12-2000 Total debtors $12 000
On 1-1-2002 Purchase ledger control account balance $ 12 700
On 1-1-2002 Sales ledger control account balance $ 14 200
On 31-12-2002:
Cheque issued to suppliers $ 19,200
Cheque received from customers $ 50,400
Discount allowed $ 400
Discount received $ 600
Returns inwards $ 1 000
Return outwards $ 900
Bad debts written off $ 1 200
Dishonored cheque returned to us $ 1 200
Credit sales $ 52 000
Credit purchases $ 28 000
Set off from purchase ledger to the sales ledger $ 2 000
5% of year end debtors should be created as provision for bad debts
Required to prepare:-
a. Purchase ledger control account for the year ended 31
st
December 2002
b.Prepare the sales ledger control account for the year ended 31
st
Dec 2002.
c.The provision for bad debts a/ct and the balance sheet extracts for the 3 years ended 31
st

Dec 2000,2001 and 2002.
Q13. The following details are available from the books of a business for the year ended 31
st
December
2002:- $
On 1-1-2000 The balance in the provision for bad debts account 600
On 31-12-2000 total debtors 18 000
On 1-1-2002 Purchase ledger control account balance 19 150
On 1-1-2002 Sales ledger control account balance 21 300
On 31-12-2002:
Cheque issued to suppliers 28 800
Cheque received from customers 75 600
Discount allowed 600
Discount received 900
Returns inwards 1 500
Return outwards 1 200
Bad debts written off 1 800
Dishonored cheque returned to us 1 800
Credit sales 78 000
Credit purchases 42 000
Set off from purchase ledger to the sales ledger 3 000
5% of year end debtors should be created as provision for bad debts
Required to prepare:- Purchase ledger and sales ledger control accounts for the year ended 31
st

December 2002
MCQ
1. What is the source of information for credit sales for preparing the control accounts?
1. Sales account in the General ledger B. Sales journal
C. General journal D. Sales ledger

1. Which of the following is not considered while preparing the sales ledger control account?
A. Opening balance of debtors B. Discount received
C. Discount allowed D. Returns inwar
3. Which item will appear on the debit side of a debtors ledger control account?
A. Cash sales B. Cheques received
C. Return inwards D. Sales on credit

4. Which item will appear on the credit side of a purchase ledger control account?
A. Cheques paid B. Discount received
C. Credit purchases D. purchases returns
5. What is the purpose of preparing the control accounts?
A. To calculate the total sales
B. To calculate the closing debtors only
C. To calculate the closing creditors only
D. To check the arithmetical accuracy of each ledger separately.

6. What is the alternative name of the sales ledger control account?
A. Total debtors account B. Total creditors account
C. Purchases account D. sales account.

7. Cash is refunded to customer, who had overpaid his account. In which ledger control account it is
recorded?
1. Debit side of sales ledger control account.
2. Credit side of sales ledger control account.
3. Debit side of purchase ledger control account.
4. Credit side of purchase ledger control account.
5.
8. A refund was received from a supplier for excess payment made by us.
Where should it be recorded?
A. Debit side of sales ledger control account.
B. Credit side of sales ledger control account.
C. Debit side of purchase ledger control account.
D. Credit side of purchase ledger control account.

9. A purchase ledger control account is prepared from the following list of items:-
Total creditors at the start of the month $ 900
Credit purchases $ 12000
CusLomers debLs wrlLLen off $ 200
Cash paid to creditors $ 11800
Returns inwards $ 300
What is the closing balance?
A. $ 600 B. $900 C. $ 1100 D. 1400
10. The table shows details of sales ledger:-
Sales ledger opening balance $ 1894
Total credit sales $ 10290
Cheques received from customers $ 7284
Cash received form customers $ 1236
Returns inwards $ 296
What is the closing balance of debtors?
A. $ 3664 B.$ 3072 C. $ 3368 D. $ 2664