Sales Ledger Control Accounts (Cambridge (CIE) IGCSE Accounting)
Revision Note
Author
Dan FinlayExpertise
Maths Lead
Sales Ledger Control Accounts
What is a sales ledger control account?
A sales ledger control account is an account that summarises all the transactions for trade receivables
It is not part of the double entry system
Where do I find the information to complete a sales ledger control account?
The books of prime entry are used to find the totals
The sales journal is used to find the total value of credit sales
The sales returns journal is used to find the total value of returned goods
The cash book is used to find the total values for:
Money received from credit customers
Money refunded to credit customers
Cash discounts allowed to credit customers
Dishonoured cheques received from credit customers
The journal is used to find the total values for:
Interest charged to credit customers on overdue accounts
Contra entries against the purchases ledger
Irrecoverable debts written off
Exam Tip
The ledger accounts are not used when preparing control accounts. The information is taken from the books of prime entry.
Why might there be a credit balance in a sales ledger control account?
A trade receivables account will usually have a debit balance
This indicates that the credit customer owes the business money
However, a trade receivables account could have a credit balance
This indicates that the credit customer is owed money
Credit balances can occur when:
Credit customers pay in advance of buying goods
Credit customers make an overpayment
The business owes refunds to credit customers
The customers have paid for goods and then returned them
Debit and credit balances are totalled separately in the sales ledger control account
This means there could be two opening balances and two closing balances
What is the layout of a sales ledger control account?
The layout looks very similar to the layout of a trade receivables ledger account
The main differences are:
There could be two opening balances
There could be two closing balances
Entries on the debit side: | Entries on the credit side: |
|
|
Exam Tip
Remember that cash sales are not recorded in the sales ledger. Only enter cash received from credit customers when the cash is used to make a payment towards an invoice.
Worked Example
Kimi maintains a full set of account records. She provides the following information for February 2024.
$ | |
On 1 February 2024 | |
Sales ledger control account debit balance b/d | 12 780 |
Sales ledger control account credit balance b/d | 150 |
Totals for February 2024 | |
Credit sales | 25 470 |
Cash sales | 5 780 |
Credit sales returns | 7 000 |
Cheques received by credit customers | 18 450 |
Cash received by credit customers | 1 400 |
Discount allowed | 3 290 |
Interest charged to credit customers | 860 |
Contra purchases ledger | 1 050 |
Irrecoverable debts written off | 870 |
At 29 February, the total amount that Kimi owed to her credit customers was $460.
Prepare the sales ledger control account for February 2024. Balance the account and bring down the balances on 1 March 2024.
Answer
Ignore the cash sales, as they do not affect the sales ledger accounts.
Enter the balances and totals on the correct sides of the account.
Transactions which increase the amount owed to the business appear on the debit side.
Credit sales
Interest
Transactions which reduce the amount owed to the business appear on the credit side.
Receipts from credit customers using cash or bank transfers
Sales returns
Discount allowed
Irrecoverable debts
Contra entries
On 1 March 2024, there will be a credit balance of $460; therefore, there will need to be a balance c/d on the debit side on 29 February 2024.
Kimi
Sales Ledger Control Account
Date | Details | $ | Date | Details | $ |
2024 Feb 1 | Balance b/d | 12 780 | 2024 Feb 1 | Balance b/d | 150 |
29 | Sales | 25 470 | 29 | Sales returns | 7 000 |
29 | Interest | 860 | 29 | Bank | 18 450 |
29 | Balance c/d | 460 | 29 | Cash | 1 400 |
29 | Discount allowed | 3 290 | |||
29 | Contra | 1 050 | |||
29 | Irrecoverable debts | 870 | |||
| 29 | Balance c/d | 7 360 | ||
39 570 | 39 570 | ||||
Mar 1 | Balance b/d | 7 360 | Mar 1 | Balance b/d | 460 |
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