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Control Accounts
Control Accounts are the total accounts used for checking the arithmetical accuracy of each of ledger
separately. The two most common control accounts are:
(i)The sales ledger control account (debtors ledger control a/c / total debtors a/c) and
(ii)The purchase ledger control account (creditors ledger control a/c/total creditors a/c)
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
The format of sales ledger control account
Balances b/d(large amount) ----------Credit sales
-----------Returned cheque
(unpaid cheque)
---------Interest charged to debtors ---------Cash refunds to customers ----------Balances c/d(small amount) ---------xxxxxxx
Balances b/d (large amount) ----------

Balances b/d(small amount)

Cash/cheque from debtors
discount allowed
Sales returns
Bad debts written off

-----------------------------------------------------

Set off purchase ledger

Balances c/d(large amount)

----------------------xxxxxxx
----------

Balances b/d (small amount)

Sources of information for items appearing in the sales ledger control account
a. Credit sales- sales day book total.
b. Returned cheques (unpaid cheques) cash book- payments side/ bank statement.
c. Interest charged to debtors- Interest received account.
d. Cash or cheques from debtors cash book-receipts side.
e. Discount allowed cash book (debit side) or discount allowed account.
f. Sales returns sales returns day book total.
g. Bad debts written off general journal or bad debts account.
h. Set off or contra entries- general journal.
Format of purchase ledger control account
Balances b/d (small amount)
--------- Balances b/d (large amount)
Cash /cheques paid to creditors --------- Credit purchases
Discount received
--------- Interest charged by Creditors
Purchases returns
-------- Balances c/d (small amount)
Set off purchase ledger
-------- Refunds from suppliers
Balances c/d (large amount)
-------xxxxx
Balances b/d (small amount)
-------- Balances b/d (large amount)

----------------------------------------xxxxxx
--------

Sources of information for items appearing in the purchases ledger control account
a Credit purchases purchases day book total
b. Interest charged by creditors interest paid account.
c. Cash/cheque paid to creditors cash book payments side.
d. Discount received cash book payment side or discount received account
e. Purchases returns purchases returns day book total.
f. Set off or contra entries general journal.
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.
Creditors ledger control account is also known as purchases ledger control account or total
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.

MCQ
1. What is the source of information for credit sales for preparing the control accounts?
A. Sales account in the General ledger
B. Sales journal
C. General journal D. Sales ledger
2. 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 inwards
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?
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.
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
Customers debts written 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

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What is the closing balance of debtors?
A. $ 3664
B.$ 3072
C. $ 3368

D. $ 2664

Assignment questions
Q 1. 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
Q 2.

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

Q3.

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

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Payments to creditors
Receipts from debtors
Customers cheques returned unpaid
Bad debts written off
Discount received
Discount allowed
Transfer from purchases ledger to sales ledger
Credit balance in sales ledger control account
Debit balance in purchases ledger control account

11 000
15 000
500
300
550
750
600
600
200

Q4.

The following information was obtained from the books of Vale.

$
March 1Debtors
9 506
Creditors
2 580
March 31
Credit sales
20 345
Credit purchases at list price
7 200
Returns outwards at list price
200
Sales returns
120
Cash and cheques received from debtors
19 580
Customers cheques dishonored
250
Cash and cheques paid to suppliers
5 170
Discount received
190
Discount allowed
210
Interest charged to customers on overdue accounts
70
Bad debts written off
155
Balance in sales ledger set off against balance in the
purchases ledger
350
Cash refunds from suppliers for overpayments
60
Debit balances in purchases ledger
40
Credit balances in sales ledger
64
All purchases and purchases returns were subject to a trade discount of 10% off the list price.
Prepare the sales ledger control account and purchases ledger control account.

Q 5.

The following information was obtained from the books of K. Kent:1st April, 2002
Trade debtors
Trade creditors
Stock in trade
st
31 March, 2003: Credit sales
Credit purchases at list price
Purchase returns at list price
Sales returns
Cash and cheque received from debtors
Customers cheque dishonored
Cash and cheque paid to creditors
Discount received
Discount allowed
Interest charged to customers on overdue accounts
Bad debts written off
Balance in sales ledger set off against balance in

$
28 518
7 740
22 500
61 440
21 600
600
360
58 740
750
15 510
570
630
210
465

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purchases ledger
1050
Cash refunds from suppliers for overpayments
180
Debit balance in purchases ledger
120
Credit balance in sales ledger
186
Interest charged by our suppliers on overdue accounts
390
Cash refunds to customers for overpayments by them
540
All purchases and purchase returns are subject to a trade discount of 20% off the list price.
during the year Cash sales were $ 22 000 and Cash purchases were $ 12 500.
On 31st March, 2003 the stock in trade was valued at $ 12 500.
Required to:a. Prepare the sales ledger control account and purchases ledger control account.
b. Calculate the gross profit of the business for the year ended 31 st March,2003.
Q 6. 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.
1st March 2003
31 March

Debtors
Creditors
Credit sales at list price
Cash sales
Returns inwards at list price
Credit purchases
Discount allowed
Discount received
Customers cheque returned by bank with remarks of
insufficient funds
Interest charged on overdue debts
Return outwards
Cheques paid to suppliers
Cheques and cash received from credit customers
Credit balance in sales ledger
Bad debts written off

4,000
2,000
2,00,00
5,000
1,500
12,000
1,500
1,400
900
250
750
7,000
15,000
300
600

Required:a. Make sales ledger control accounts of Mr. Ibrahim for the month of March 2003.
b. Calculate total Turn over on 31st March 2003
Q 7.

The following information was obtained from the books of K. Vasanthi.

1st April 2003

Trade debtors
Trade creditors
Stock in trade
31st March 2004 Credit sales
Credit purchase at list price*
Purchase return at list price*
Sales return

$
19,012
5,160
15,000
40,690
14,400
400
240

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39,160
Cash and cheque received from debtors
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 31st March 2004 the stock in trade was valued at $ 12,500.
Required:a. Total Debtors Account for the year ended 31 st March 2004
b. Total Creditors Account for the year ended 31 st March 2004.
c. Calculate the Gross profit of the business for the year ended 31 st march 2004.

Q 8.

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

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2000,2001 and 2002.

Q 9. Ander Paul, a sole trader, provided the following information from his accounts for the year ended 31 st
Dec 2013.
$
Credit sales for
2013
75 500
Credit purchases for
2013
68 900
Credit sales return for 2013
700
Total debtors at
1 Jan 13
Total creditors at
1 Jan 13
Prov. for bad debts as at 1 Jan 12
Discount
Sales
Debtors

4 000

Cash
9 000

Bank
1 000
60 000

8 500
4 800
600
Discount
Debtors
(dishonored
Cheque)
Purchase
Creditors

Cash

Bank
600

1 800

1 500
5 000 40 000

The cash book extract figures are totals for the year.
The following points are also relevant.
1. $ 600 of trade debtors were written off as bad debts on 7 th Oct 2003
2. A revised provision for bad debts is to be 5%of the trade debtors balance as at 31 st Dec 2013.
3. Balance in the sales ledger set off against balance in the purchase ledger $ 300.
Required to prepare the Sales ledger control account and the provision for bad debt account for the year
ended 31st Dec 2003.