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CONTROL ACCOUNTS
It is an account held in a ledger, which summarizes the entries and balances of all the accounts in the
same or another ledger.
It is a total account inserted in a ledger to make its self balancing.
The balance of this account should be similar to the total of the detailed balances of the ledger giving the
proof of the arithmetic accuracy of book keeping entries in the ledger.
Control accounts in the general ledger represent the total of all the accounts in some other ledgers.
The accuracy of these ledgers is proved by the control account and they are also known self balancing
ledger or adjustment account.
Two control accounts are maintained in the general ledger
a) Debtors or sales ledger control account
b) Creditors or purchases ledger control account.
These control accounts are balanced off at the end of every month.
The balance carried down which is the debit balance in the debtors ledger control account must be equal
to the total of all debit balances in the personal accounts in the creditors ledger.
The agreement between the balance of the control account and the total of all balances in the respective
ledger indicates the accuracy of the all transactions recorded in that ledger.
Advantages of control accounts
1. It shows at a glance the total value and balances contained in the ledger to which it pertains. It
would be a very tedious exercise to try to trace the totals of day sales, purchases and payments
from subsidiary ledgers.
2. The control accounts serves as trial balance for the subsidiary ledgers. It is a check on the
accuracy of the entries made in the individual accounts. One only needs to take the totals from the
individuals accounts in the ledgers and compare them with the totals in the control accounts. If
there is any difference then there must be an error o a group accounts.
3. Control accounts makes location of errors easier and the accuracy of ledgers are easily proved.
Errors in the trial balance can easily be zeroed down to a specific ledger making it easier to locate
them.
4. Control account helps to segregate the duties between the accountant responsible for the ledgers
and another for controls.
5. Speeds up the preparation of final accounts. Control accounts provide the totals that will be used
to draw the financial statements.
SALES LEDGER CONTROL ACCOUNTS
The sales ledger control account records the total transactions with credit customers and reflects the
amount owed by all the debtors obtained from the individual balances in the sales ledger accounts.
Other elements in the sales ledger control account include
i. Return inwards
ii. Bad debts\
iii. Dishonored cheques
iv. Discounts allowed
v. Inter-account settlements with suppliers (contra) - They occour where a customer is a supplier at
the same time. The debts receivable from that account is set-off against the debt payable to that
person. This is known as a contra entry.
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It is recorded as
DR: Purchases ledger control account
CR: Sales ledger control account.
Debtors Ledger Control Account
Shs
Balance b/f x Total cash received (From cash book) x Sales
( From sales daybook) x Total returns inwards
x
Total other charges x
(From journal or sales daybook) Total bad debts written off (from journal) x
Total discount allowed from cashbook x
Bal c/d x
x x
Example 1
THE FOLLOWING INFORMATION WAS OBTAINED FROM THE BOOK OF P.Burton relating to
the year 2009
2009 Shs.
Jan 1 Balance brought forward 11,500
Dec 31 Sales per sales daybook 60,850
Dec 31 Cash received per cashbook 48,950
Dec 31Discounts allowed per cash book 2,585
Dec 31 Returns from customers 4,565
Dec 31 Bad debts written off 545
Prepare a sales ledger control account
PURCHASES LEDGER CONTROL ACCOUNT
The purchases ledger control account (otherwise known as total creditors account) records the total
transcations with credit suppliers and reflects the amount owed to all the suppliers obtained from the
individual balances in the purchases ledger.
Other elements in the purchases ledger control account include:
i. Return outwards
ii. Discount received
iii. Dishonored cheques
iv. Intercompany settlements with customers contra - - It occours where a supplier is a customer at
the same time. The debt payable is set off against the debt receivable from that person. It is
recorded as:
DR: Purchases ledger control account
CR: Sales ledger control account
Creditors ledger control account
Shs Shs.
Total cash paid x Bal b/f x
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Total return outwards x Total Purchases x
Total discount received x
Bal c/d x
x x
Example 2
From the following information, prepare the creditors ledger control account
2010 Shs.
Jan 1 Purchases ledger balance b/f 8,972
Totals for the year 2010
Dec 31 Purchases 23,589
Dec 31 Return outwards 3,843
Dec 31 Discount received 1,582
Dec 31 Cheques paid to suppliers 20,473
Example 3
a) The following balances were extracted from the books of Katee Ltd. for the month of April 2011:
Shs.
Debit balances (1 April 2011): Sales Ledger 2,856,000
Purchases Ledger 21,000
Credit balances (1 April 2011): Sales Ledger 81,000
Purchases Ledger 1,107,600
Discount received 285,000
Discount allowed 419,400
Purchase (including cash purchases of shs. 152,000) 2,668,000
Cash sales 1,236,000
Credit sales 4,136,000
Credit notes issued to customers for returned goods 150,000
Sales ledger debit balances off-set against purchases ledger 73,800
Payment to creditors 2,318,400
Interest charged by creditors on overdue accounts 138,000
Receipt from customers 3,156,000
Bad debts written off 74,400
Customer’s unpaid Cheques 52,200
Interest charged to customers on overdue accounts 192,200
Debt collection expenses charged to debtors 21,600
Credit notes received from suppliers 53,400
Balances as at 30 April 2011: Purchases ledger (debt) 28,800
Sales ledger (credit) 101,400
Required
i) Sales ledger control account for the month ended 30
th
April 2011
ii) Purchases ledger control account for the month ended 30
th
April 2011
Example 4
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The following information has been extracted from the books of Mutero traders Limited for the month of
April 2002.
Balance as at 1
st
April 2002:
Sales ledger Debit balances 838,000
Credit balances 184,000
Purchases ledger Debit balances 196,000
Credit balances 598,000
Transactions during the month:
Sales on credit 8,784,000
Purchases on credit 7,849,000
Return inwards 248,000
Return outwards 179,000
Cheques received from trade debtors 2,968,000
Cheques paid to trade creditors 4.674,000
Cash paid to trade creditors 1,393,000
Bad debts written off 139,000
Discount allowed to trade debtors 162,000
Discount received from trade creditors 231,000
Credit sales offset against credit purchases 356,000
Credit purchase of a motor vehicle posted in the purchases ledger 598,000
Dishonoured cheques from trade debtors 193,000
Cash received to replace dishonoured cheques from trade debtors 106,000
An invoice to trade debts of sh 174,000 posted as 147,000
Balances as at 30
th
April 2002
Sales ledger credit balance 123,000
Purchases ledger debit balances 177,000
Required
The sales ledger and purchases ledger control account for the month ended 30
th
April 2002.

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CONTROL ACCOUNTS It is an account held in a ledger, which summarizes the entries and balances of all the accounts in the same or another ledger. It is a total account inserted in a ledger to make its self balancing. The balance of this account should be similar to the total of the detailed balances of the ledger giving the proof of the arithmetic accuracy of book keeping entries in the ledger. Control accounts in the general ledger represent the total of all the accounts in some other ledgers. The accuracy of these ledgers is proved by the control account and they are also known self balancing ledger or adjustment account. Two control accounts are maintained in the general ledger a) Debtors or sales ledger control account b) Creditors or purchases ledger control account. These control accounts are balanced off at the end of every month. The balance carried down which is the debit balance in the debtors ledger control account must be equal to the total of all debit balances in the personal accounts in the creditors ledger. The agreement between the balance of the control account and the total of all balances in the respective ledger indicates the accuracy of the all transactions recorded in that ledger. Advantages of control accounts 1. It shows at a glance the total value and balances contained in the ledger to which it pertains. It would be a very tedious exercise to try to trace the totals of day sales, purchases and payments from subsidiary ledgers. 2. The control accounts serves as trial balance for the subsidiary ledgers. It is a check on the accuracy of the entries made in the individual accounts. One only needs to take the totals from the individuals accounts in the ledgers and compare them with the totals in the control accounts. If there is any difference then there must be an error o a group accounts. 3. Control accounts makes location of errors easier and the accuracy of ledgers are easily proved. Errors in the trial balance can easily be zeroed down to a specific ledger making it easier to locate them. 4. Control account helps to segregate the duties between the accountant responsible for the ledgers and another for controls. 5. Speeds up the preparation of final accounts. Control accounts provide the totals that will be used to draw the financial statements. SALES LEDGER CONTROL ACCOUNTS The sales ledger control account records the total transactions with credit customers and reflects the amount owed by all the debtors obtained from the individual balances in the sales ledger accounts. Other elements in the sales ledger control account include i. Return inwards ii. Bad debts\ iii. Dishonored cheques iv. Discounts allowed v. Inter-account settlements with suppliers (contra) - They occour where a customer is a supplier at the same time. The debts receivable from that account is set-off against the debt payable to that person. This is known as a contra entry. Page 1 of 4 It is recorded as DR: Purchases ledger control account CR: Sales ledger control account. Debtors Ledger Control Account Shs Balance b/f x Total cash received (From cash book) x Sales ( From sales daybook) x Total returns inwards x Total other charges x (From journal or sales daybook) Total bad debts written off (from journal) x Total discount allowed from cashbook x Bal c/d x x x Example 1 THE FOLLOWING INFORMATION WAS OBTAINED FROM THE BOOK OF P.Burton relating to the year 2009 2009 Shs. Jan 1 Balance brought forward 11,500 Dec 31 Sales per sales daybook 60,850 Dec 31 Cash received per cashbook 48,950 Dec 31Discounts allowed per cash book 2,585 Dec 31 Returns from customers 4,565 Dec 31 Bad debts written off 545 Prepare a sales ledger control account PURCHASES LEDGER CONTROL ACCOUNT The purchases ledger control account (otherwise known as total creditors account) records the total transcations with credit suppliers and reflects the amount owed to all the suppliers obtained from the individual balances in the purchases ledger. Other elements in the purchases ledger control account include: i. Return outwards ii. Discount received iii. Dishonored cheques iv. Intercompany settlements with customers – contra - - It occours where a supplier is a customer at the same time. The debt payable is set off against the debt receivable from that person. It is recorded as: DR: Purchases ledger control account CR: Sales ledger control account Creditors ledger control account Shs Shs. Total cash paid x Bal b/f x Page 2 of 4 Total return outwards Total discount received x Bal c/d x Total Purchases x x x x Example 2 From the following information, prepare the creditors ledger control account 2010 Shs. Jan 1 Purchases ledger balance b/f 8,972 Totals for the year 2010 Dec 31 Purchases 23,589 Dec 31 Return outwards 3,843 Dec 31 Discount received 1,582 Dec 31 Cheques paid to suppliers 20,473 Example 3 a) The following balances were extracted from the books of Katee Ltd. for the month of April 2011: Shs. Debit balances (1 April 2011): Sales Ledger 2,856,000 Purchases Ledger 21,000 Credit balances (1 April 2011): Sales Ledger 81,000 Purchases Ledger 1,107,600 Discount received 285,000 Discount allowed 419,400 Purchase (including cash purchases of shs. 152,000) 2,668,000 Cash sales 1,236,000 Credit sales 4,136,000 Credit notes issued to customers for returned goods 150,000 Sales ledger debit balances off-set against purchases ledger 73,800 Payment to creditors 2,318,400 Interest charged by creditors on overdue accounts 138,000 Receipt from customers 3,156,000 Bad debts written off 74,400 Customer’s unpaid Cheques 52,200 Interest charged to customers on overdue accounts 192,200 Debt collection expenses charged to debtors 21,600 Credit notes received from suppliers 53,400 Balances as at 30 April 2011: Purchases ledger (debt) 28,800 Sales ledger (credit) 101,400 Required i) Sales ledger control account for the month ended 30th April 2011 ii) Purchases ledger control account for the month ended 30th April 2011 Example 4 Page 3 of 4 The following information has been extracted from the books of Mutero traders Limited for the month of April 2002. Balance as at 1st April 2002: Sales ledger Debit balances 838,000 Credit balances 184,000 Purchases ledger Debit balances 196,000 Credit balances 598,000 Transactions during the month: Sales on credit 8,784,000 Purchases on credit 7,849,000 Return inwards 248,000 Return outwards 179,000 Cheques received from trade debtors 2,968,000 Cheques paid to trade creditors 4.674,000 Cash paid to trade creditors 1,393,000 Bad debts written off 139,000 Discount allowed to trade debtors 162,000 Discount received from trade creditors 231,000 Credit sales offset against credit purchases 356,000 Credit purchase of a motor vehicle posted in the purchases ledger598,000 Dishonoured cheques from trade debtors 193,000 Cash received to replace dishonoured cheques from trade debtors 106,000 An invoice to trade debts of sh 174,000 posted as 147,000 th Balances as at 30 April 2002 Sales ledger credit balance 123,000 Purchases ledger debit balances 177,000 Required The sales ledger and purchases ledger control account for the month ended 30th April 2002. 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