AS/A – LEVEL ACCOUNTING

CONTROL ACCOUNT
RECONCILIATION

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FQ :
How would we prepare a Sales Ledger Control Account
nd Puchase Ledger Control Account
 CONTROL ACCOUNT RECONCILIATION

Learning outcomes:
• Introduction to Control
• accounts
Format of control
• accounts
Working of control
• accounts
Updated control accounts and ledger
• reconciliation
Solved example
 INTRODUCTION TO CONTROL ACCOUNT
Sales ledger control account is prepared to check the arithmetical accuracy of the
transaction recorded in the sales ledger (debtors accounts).
urchase ledger control account is prepared to check the arithmetical accuracy o
transactions recorded in the purchases ledger (creditors accounts).
The closing balance as per the control account is compared to the total of closing
balances of all the accounts in the ledgers to check if they are same.

Other concepts:
• Contra / Set – off entry
• Credit balances in debtors account and Debit balances in creditors account
The purpose of control accounts
•They act as a check on the accuracy of the ledgers (the balance of the
control account should equal the total of all individual accounts).

•They help locate errors and find them quickly.

•They prevent fraud by spreading work among staff

•They provide an up to date figure of debtors and creditors.

•They help to locate missing items from incomplete records.

 FORMAT OF CONTROL ACCOUNT
Sales ledger control account Purchases ledger control account
Details $ Details $ Details $ Details $
Balance b/d xx Cash/ Cheque recd. xx Cash/ Cheque paid xx Balance b/d xx
Credit sales xx Discount allowed xx Discount received xx Credit purchases xx
ishonoured chequexx Bad debts xx Purchase returns xx DIRC xx
Interest xx Sales returns xx Balance c/d xx Balance c/d xx
Balance c/d xx Balance c/d xx Uncommon
(uncommon) xx xx xx xx
Balance c/d Balance c/d
(uncommon) Uncommon
 SALES LEDGER CONTROL
ACCOUNT

• Also know as total trade receivables account.

• The sales ledger control account, which summarises
• the individual customer accounts,
• i.e. debtors’ accounts
.
Nominal Ledger/General Ledger
Sales ledger control account (Total Trade Receivables account)

Date Details $ Date Details $

Balance b/d(common) Xx Balance b/d (uncommon) Xx

Credit sales Xx Sales return Xx

xx
Bank/cash
Bank(dis check) Xx Discount allowed Xx

Bank/cash (refunds) Xx Irrecoverable debts Xx

Interest charged xx Purchase ledger control Xx

account(contra entry)
Balance c/d(uncommon xx Balance c/d(common) xx

(trade recivables)

xxx xxx

Balance b/d(common) xx Balance b/d(uncommon xx

 PURCHASE LEDGER CONTROL
ACCOUNT

• Also known as total trade payables account

• The purchases ledger control account, which summarises
• the individual
suppliers’ accounts,
i.e. creditors’
accounts.
 Nominal Ledger
Purchase ledger control account (Total trade payables account)
Date Details $ Date Details $
Balance Balance b/d(common)
b/d(uncommon)
Purchase returns Credit purchases
Cash/ bank Bank (dishonoured
cheque)
Discount received Cash / bank(refunds)
Sales ledger control Interest charged on
account(contra entry) overdue amount

Balance c/d
(common)(trade
payable)
Balance
c/d(uncommon)
xxx xxx
 WORKING OF CONTROL ACCOUNT
Sales ledger control
Using info
Sales journal account
from Purchases ledger
Purchases journal
BOPE control account
Sales returns journal
Purchases returns Closing
journal balance
Cash book as per the
others control
account
Posting The matching of
entries balance calculated
Closing
balances as per control
Ledgers account and
Sale Purchas Gener as per sales and
s es al Purchase balance extracted
ledger from ledgers
indicates account
 LFQ :
y do you think Debtors Account have a Credit balance
d
editors Account have a Debit Balance
Debtors Account having a Credit balances

Debtors A/c could have a credit balance at the beginning of the year if :
1.Overpaid an invoice.
2.Cleared his account and later returned goods for a refund.
3.Paid in Advance

Creditors A/c could have a debit balance at the beginning of the year if :
4.Overpaid an invoice.
2.Returning Goods after Paying the amount due .
3.Paid in Advance
RECALL : BOOKS OF PRIME ENTRY FROM WHERE YOU GET
SALES RELATED INFORMATION
RECALL : BOOKS OF PRIME ENTRY FROM WHERE YOU GET
SALES RELATED INFORMATION
Item Sources of information
Credit Sales Sales journal
Sales return Sales return journal
Cash and cheques received from Cash book
debtors
Discount allowed to debtors Cash book
Dishonored cheques Cash book
Refunds to debtors Cash book
Bad debts written off General journal
Interest charged on overdue accounts General journal
RECALL : BOOKS OF PRIME ENTRY FROM WHERE YOU GET
PURCHASES RELATED INFORMATION
SELF EVALUATE: BOOKS OF PRIME ENTRY FROM WHERE YOU GET
PURCHASES RELATED INFORMATION

Item Sources of information

purchase Purchases journal
purchase return Purchases returns journal
Cash and cheques paid to Cash book
creditors
Discount received from creditors Cash book
Refunds from creditors Cash book
Interest charged on overdue General journal
accounts
Q:
at according to you could be the
es and Limitations of Preparing Control Accounts ?
•They act as a check on the accuracy of the ledgers (the balance of
the control account should equal the total of all individual accounts). ​
•They help locate errors and find them quickly. ​
•They prevent fraud by spreading work among staff​
•They provide an up to date figure of debtors and creditors &
speed up preparation of final accounts. ​
•They help locate missing items from incomplete records.
9706/22/O/N/23

Please put the full sum

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SELF EVALUATE

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t posted fromm Cash Book
or is in Journal
rrection in PLCA : Debit side That means Subtract

Error : 2
Error in journal
It means Correction in PLCA
Undercast : same side
Overcast : Opp Side
( cr Side ) ( + )

ror 3 : Interest on Over due : Credit side

ame side : Add
ut Posted on Wrong side .
rong side : Double amount opposite side
ouble amount Debit Side ( Deduct )
ror is in Supplier Account
o Correction in Purchase Ledger.
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 • Incorrect sales ledger balances could
mean Lawrence
not collecting the right amount from credit
customers.
• It may also risk resulting in irrecoverable
debts .

• Notn- collection of debts would negatively

impact cash balances .
• IT may also lead to incorrect financial
statements.

A transaction recorded in the wrong account of the

same class
But using the correct amount on the correct side.
 Prepare the sales ledger control account
9706/02/O/N/04 Date Details $ Date Details $
 Prepare the sales ledger control account
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e
Details $ $
Details $ $
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Warren M/J/18 paper 23
Warren M/J/18 paper 23