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Chapter 16: Control accounts

Shweta Nominal ledger Sales ledger control account Date

Details

Folio

20–8 May 1

Balance

b/d

31 Sales

$

Date

20–8 1 850 May 1

Details

Folio

$

Balance

b/d

1 115

5 360 31 Sales returns

7 210

1 134

Bank

4 965

Irrecoverable debt

1 835

Contra entry

1 190

Balance

c/d

7 210

20–8 June 1 Balance

b/d

1 771 7 210

1 771

Shweta Nominal ledger Purchases ledger control account Date 20–8 May 1

Details

Folio

$

Date

Details

Folio

$

Balance

b/d

2 118

Purchases returns

20–8 1 216 May 1

Bank

4 508 31 Purchases

5 110

Discount received

1 192

Interest charged

1 114

Contra entry

1 190

Balance

Balance 20–8 June 1 Balance

c/d

b/d

c/d

1 135

2 371

1 771

7 377

7 377

20–8 1 135 June 1 Balance

b/d

2 371

TEST YOURSELF 16.4

1 In connection with control accounts, explain the meaning of a contra entry.

You can now answer Questions 5 and 6 at the end of this chapter.

Revision checklist ■ ■ ■ ■ ■ ■

The main purpose of control accounts is to assist in locating errors in the sales ledger and the purchases ledger. A sales ledger control account resembles the account of a credit customer but contains transactions affecting all credit customers. A purchases ledger control account resembles the account of a credit supplier but contains transactions affecting all credit suppliers. The information to prepare control accounts is obtained from the books of prime entry. It is possible to have a balance on each side of a control account. If a business is both a customer and a supplier, a contra entry may be made to transfer a balance from the sales ledger account to the purchases ledger account.

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