Due to their small number of business transactions small firms can operate effectively with one ledger.
Large business firms have a large number of transactions and find it necessary to maintain separate ledgers for control purchases
In this case the ledger is divided into two main parts namely
Ø Personal ledger
Ø Impersonal ledger
The personal ledger
Consists of the amount of persons and the organization as a whole which have either supplied to receive goods or services from the firm on credit, these are;-
a) Debtors control accounts or sales ledger control a/c
b) Creditors control account or purchases ledger control a/c
ADVANTAGES
a) Errors can be traced to individuals
b) Being a summary: control accounts are a quick source of reference for amount owing to and by the firm
INFORMATION FOR THE CONTROL ACCOUNTS
1. SALES LEDGER CONTROL ACCOUNTS
a) Opening balance
-From list of debtors balance at the end of previous ledgers
b) Credit sales
– From sales day book
c) Returns inwards
-From return inward day book.
d) Cheques or cash received
-From the cash book
e) Closing balance
-List of debtors balance drawn up at the end of the trading period
CONSTRUCTING SALES LEDGER CONTROL A/C OR
DEBTORS CONTROL A/C
|
D Date |
Details |
Amount |
Date |
Details |
Amount |
|
|
Balance b/d |
xxx |
|
Returns inwards |
xxx |
|
Credit sales |
xxx |
Discount allowed |
xxx |
||
|
Bills received |
xxx |
Cash /bank received |
xxx |
||
|
Cheque dishonored |
xxx |
Bad debts w/o |
xxx |
||
|
Carriage charge |
xxx |
Bills receivable |
xxx |
||
|
Refund on over due |
xxx |
Set off [purchase ledger] |
xxx |
||
|
|
|
Balance c/d |
xxx |
||
|
|
xxxx |
|
xxxx |
||
|
Balance c/d |
xxx |
|
|
||
|
|
|
|
|
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Example
You are required to prepare a sales ledger control a/c from the following details May 1st sales ledger balance 4,936
31 returns inwards journal…………………………1,139
Sales journal …………………………………………49,916
Cash and cheque received from customers …..46,490
Discount allowed ………………………………..1455
May 31 sales ledger balance C/D ………………. 5,768
Dr SALES LEDGER CONTROL A/C Cr
|
D Date |
Details |
Amount |
Date |
Details |
Amount |
|
1.5 |
Balance b/d |
4,936 |
31.5 |
Returns inwards |
1139 |
|
Credit sales |
49,916 |
Discount allowed |
1,455 |
||
|
|
|
Cash /bank received |
46,490 |
||
|
|
|
Balance c/d |
5,768 |
||
|
|
54,852 |
|
54,852 |
||
|
Balance b/d |
5,768 |
|
|
||
|
|
|
|
|
edu.uptymez.com
EXERCISE
Prepare a sales ledger control a/c from the following information of July 1999, carrying down the balance at 31july.
July 1 sales ledger balance 9,700
Sales journal 99,280
Bad debts written off 279
Cheque received from debtors 95,120
Discount allowed 1,285
Cheque dishonored 226
Returns inwards 3,170
Set off against balance in purchases ledger 400
Dr SALES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
1.7 |
Balance b/d |
9,700 |
31.7 |
Bad debts |
279 |
|
Credit sales |
99,280 |
Bank |
95,120 |
||
|
Cheque dishonored |
226 |
Discount allowed |
1,285 |
||
|
|
|
Returns inwards |
3,170 |
||
|
|
|
Set off |
400 |
||
|
|
|
Balance c/d |
8,952 |
||
|
|
109,206 |
|
109,206 |
||
|
1.8 |
Balance b/d |
8,952 |
|
|
|
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2. PURCHASES LEDGER CONTROL A/C
Opening balance
-List of creditors balance drawn
Credit purchases
-From purchases day book
Returns outwards
-From the returns outwards journal
Cash /cheque paid
-From the cash book
Closing balance
-List of creditors balances drawn up at the end of the trading period.
Dr PURCHASES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
|
Returns outwards |
xxx |
|
Balance b/d |
xxx |
|
Discount received |
xxx |
Credit purchases |
xxx |
||
|
Cash /cheque paid |
xxx |
|
|
||
|
Set off |
xxx |
|
|
||
|
Bills payable |
xxx |
|
|
||
|
Balance c/d |
xxx |
|
|
||
|
|
|
|
|
||
|
|
xxx |
|
xxx |
||
|
|
|
Balance b/d |
xxx |
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TRANSACTION WHICH ARE NEITHER RECORDED IN SALES LEDGER NOR PURCHASES LEDGER CONTROL ACCOUNTS.
I. Cash purchases during the year
II. Cash sales during the year
III. Provision for bad debts
IV. Cash allowance made to customer (allowance made to customer)
V. Discount on cash sales
VI. Discount on cash purchases
VII. Bills payable (honored/paid)
VIII. Bill receivable (received)
Example
You are required to prepare a purchase ledger control account for the following information
January 1
Purchases ledger balance 3,676
Purchases journal 42,257
Returns outward journal 1,098
Cheque paid to suppliers 3,875
Discount received 887
Dr PURCHASES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
1.11 |
Returns outwards |
1,098 |
31.11 |
Balance b/d |
3,676 |
|
Discount received |
887 |
Credit purchases |
42,257 |
||
|
Cash /cheque paid |
3,875 |
|
|
||
|
Balance c/d |
40,073 |
|
|
||
|
|
45,933 |
|
45,933 |
||
|
|
|
Balance b/d |
40,073 |
edu.uptymez.com
EXERCISE
1. You are required to prepare a sales ledger control a/c from the following information for the month of November 2010
November 1
Sales ledger balance 24,000
Total for November
Sales day book 14,000
Returns inwards day book 1,000
Cheque and cash received from customer 18,000
Discount allowed 500
Sales ledger balances 18,500
Dr SALES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
1.11 |
Balance b/d |
24,000 |
31.11 |
Returns inwards |
1,000 |
|
Credit sales |
14,000 |
Bank and cash |
18,000 |
||
|
|
|
Discount allowed |
500 |
||
|
|
|
Balance c/d |
18,500 |
||
|
|
38000 |
|
38000 |
||
|
Balance b/d |
18,500 |
|
|
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2. You are required to prepare purchases ledger control a/c from the following information for April, the balance of account is to be taken as amount of account payable on 30th April 2011.
April 1
Purchases ledger balance 11,241
Total for April
Purchases day book 6,100
Returns outwards day book 246
Cheque paid to suppliers 8300
30 purchases ledger balance ?
Discount received from suppliers 749
Dr PURCHASES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
31.4 |
Returns outwards |
246 |
1.4 |
Balance b/d |
11,241 |
|
|
Bank |
8,300 |
31.4 |
Credit purchases |
6,100 |
|
|
Discount allowed |
749 |
|
|
|
|
|
Balance c/d |
8,046 |
|
|
|
|
|
|
17,341 |
|
|
17,341 |
|
|
|
|
1.5 |
Balance b/d |
8,046 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
edu.uptymez.com
EXAMPLE
The following figures were taken from the books of gold company limited 1st January 1990
Balance on sales ledger Dr 112,320
Balance on sales ledger Cr 1,470
Balance on purchases ledger Dr 1,180
Balances on purchases ledger CR 72,280
Transaction up 31st December 1990
Sales to customers on credit 108,450
Cash sales during the year 20,000
Purchases on credit for supplier 63,250
Cash purchase 30,000
Allowances made to customers 1,870
Goods returned to suppliers 1,230
Cash received from customer 96,450
Bad debts [written off] 850
Discount allowed to customer 4,960
Discounted allowed by supplier 4,120
Cash paid to the supplier 61,420
Cash paid to customer 250
Transfer from sales ledger to purchases ledger 5,980
Transfer from purchases ledger to sale ledger 2,140
Legal and other expenses charged to customers 350
Balance on sales ledger Cr 1100
Balance on purchases DR 890
Required
Prepare sales ledger control a/c and Purchases ledger control A/C.
Dr SALES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
1.1.90 |
Balance b/d |
112,320 |
1.1.90 |
Balance b/d |
1,470 |
|
|
Credit sales |
108,450 |
|
Allowance |
1,870 |
|
|
Cash repaid |
250 |
|
Cash receivable |
96,450 |
|
|
Legal cost and expenses |
350 |
|
Bad debts |
850 |
|
|
Balance c/d |
1100 |
|
Discount allowed |
4,960 |
|
|
|
|
|
To purchases ledger |
5,980 |
|
|
|
|
|
From purchases ledger |
2,140 |
|
|
|
|
|
Balance c/d |
107,650 |
|
|
|
221,370 |
|
|
221,370 |
|
1.1.91 |
Balance b/d |
107,650 |
1.1.91 |
Balance b/d |
1,100 |
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Dr PURCHASES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
1.1.90 |
Balance b/d |
1,180 |
1.1.90 |
Balance b/d |
72,280 |
|
31.1.90 |
Returns outward |
1,230 |
31.12.90 |
Credit purchases |
63,250 |
|
|
Discount received |
4,120 |
|
Balance c/d |
890 |
|
|
Cash paid |
61,420 |
|
|
|
|
|
From Sales ledger |
5,980 |
|
|
|
|
|
To Sales ledger |
2,140 |
|
|
|
|
|
Balance c/d |
60,350 |
|
|
|
|
|
|
136,420 |
|
|
136,420 |
|
1.191 |
Balance b/d |
890 |
1.1.91 |
Balance b/d |
60,350 |
edu.uptymez.com
EXERCISE
You are required to prepare a purchases ledger control a/c from the following information for the month April 2011.
April 1
Purchases ledger balance 11,241
Total for April
Purchases day book 6,100
Returns outward day book 246
Cheque paid to the supplier 8300
Discount received from supplier 249
30 purchases balance ?
Dr PURCHASES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
|
Returns outwards |
246 |
1.4 |
Balance b/d |
11,241 |
|
|
Cheque paid |
8,300 |
|
Credit purchases |
6100 |
|
|
Discount received |
749 |
|
|
|
|
30.4 |
Balance c/d |
8,046 |
|
|
|
|
|
|
17,341 |
|
|
17,341 |
|
|
|
|
1.5 |
Balance b/d |
8,046 |
|
|
|
|
|
|
|
edu.uptymez.com
EXERCISE 2.
Prepare a sales ledger a/c from the following information 2012.
March 1
Debt balance 12,000
Total information
Cash and cheque received from bank 9,000
Discount allowed 11,000
Debit balance in the sales ledger set off against credit balance in the purchases ledger 100
31 debit balance ?
Credit balance 50
Dr SALES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
1.3 |
Balance b/d |
12,000 |
|
Cash and bank |
11,000 |
|
|
Credit sales |
9,000 |
Discount allowed |
1,000 |
|
|
31.12 |
Balance c/d |
50 |
Set off |
100 |
|
|
|
|
|
Balance c/d |
8,950 |
|
|
|
|
21050 |
|
21050 |
|
|
1.4 |
Balance b/d |
8,950 |
Balance b/d |
50 |
|
|
|
|
|
|
|
edu.uptymez.com
EXERCISE 3
You are required to prepare control a/c from the following;-
Jan 1
Purchases ledger balance 11,874
Sales ledger balance 19,744
Total for the year
Purchases journal 154,562
Sales journal 199,662
Returns outwards journal 2,648
Returns inwards journal 4,556
Cheque paid to the supplier 146,100
Petty cash paid to the supplier 78
Cheque and cash received from customer 185,960
Discount allowed 5830
Discount received 213
Dr PURCHASED LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
|
Returns outwards |
2,648 |
1.1 |
Balance b/d |
11,874 |
|
|
Cheque paid |
146,100 |
|
Credit purchases |
154,562 |
|
|
Cash paid |
78 |
|
|
|
|
|
Discount received |
2,134 |
|
|
|
|
31.12 |
Balance c/d |
15,476 |
|
|
|
|
|
|
166,436 |
|
|
166,436 |
|
|
|
|
1.2 |
Balance b/d |
15,476 |
|
|
|
|
|
|
|
edu.uptymez.com
Dr SALES LEDGER CONTROL A/C Cr
|
Date |
Details |
Amount |
Date |
Details |
Amount |
|
1.01 |
Balance b/d |
147,44 |
|
Returns inwards |
4,556 |
|
|
Credit sales |
199,662 |
Cash and cheque |
185,960 |
|
|
|
|
|
Discount allowed |
5,430 |
|
|
|
|
|
Balance c/d |
23,060 |
|
|
|
|
219,406 |
|
219,406 |
|
|
1.02 |
Balance b/d |
23,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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