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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