Calculating Values using Control Accounts (Cambridge (CIE) IGCSE Accounting)

Revision Note

Calculating Values using Control Accounts

How can I use a ledger account to find a missing value?

  • If you are missing just one value from an account then you can find it

  • STEP 1
    Draw up the ledger account

  • STEP 2
    Fill in the known values

  • STEP 3
    Find the balancing figure for the account

    • This is the missing value

What information can I find using a sales ledger control account?

  • You can use a sales ledger control account to find the following information:

    • The trade receivables balance at the start of the financial year

    • The trade receivables balance at the end of the financial year

    • Credit sales

    • Credit sales returns

    • Receipts from trade receivables during the year

    • Discount allowed to trade receivables

    • Irrecoverable debts written off

Layout of a sales ledger control account
Layout of a sales ledger control account

Examiner Tips and Tricks

Exam questions commonly ask you to find the value of the credit sales.

Credit sales
= payments from credit customers
- opening trade receivables
+ closing trade receivables
+ cash discounts allowed
+ credit sales returns
+ irrecoverable debts written off
+ contra entries
- interested charged to credit customers

What information can I find using a purchases ledger control account?

  • You can use a purchases ledger control account to find the following information:

    • The trade payables balance at the start of the financial year

    • The trade payables balance at the end of the financial year

    • Credit purchases

    • Credit purchases returns

    • Payments to trade payables during the year

    • Discount received from trade payables

Layout of a purchases ledger control account
Layout of a purchases ledger control account

Examiner Tips and Tricks

Exam questions commonly ask you to find the value of the credit purchases.

Credit purchases
= payments to credit suppliers
- opening trade payables
+ closing trade payables
+ cash discounts received
+ credit purchases returns
+ contra entries
- interested charged by credit suppliers

What information can I find using a cash book?

  • You can use a cash book to find the following information:

    • Amounts paid by the business

      • Cash purchases

      • Expenses

      • Payments to trade payables

      • Drawings

    • Amounts received by the business

      • Cash sales

      • Income

      • Receipts from trade receivables

      • Capital introduced

Layout of a cash book
Layout of a cash book

Examiner Tips and Tricks

Remember sales and purchases can be made on a credit or cash basis.

Total sales = Credit sales + Cash sales

Total purchases = Credit purchases + Cash purchases

Worked Example

Mini is a sole trader who does not keep full accounting records. Mini provided the following information.

 

1 January 2023

$

31 December 2023

$

Shop fittings 

9 000

9 000

Inventory 

35 600

39 800

Trade receivables 

19 200

18 400

Bank 

6 000

9 600

Trade payables 

20 800

16 000

Expenses owing 

300

420

 Receipts and payment summary for the year ended 31 December 2023:

 

$

Receipts from trade receivables 

117 500

Payments to trade payables 

72 600

Drawings 

33 500

General expenses 

30 600

Purchase of shop fittings

3 000

Cash sales 

38 000

Cash purchases

12 200

No cash discount was allowed or received during the year.

Prepare the trading section of the income statement for Mini for the year ended 31 December 2023.

Answer

Find the credit sales by using a sales ledger control account. The credit sales will be the balancing figure.

Date

Details

$

Date

Details

$

2023

Jan 1

 

Balance b/d

 

19 200

2023

Dec 31

 

Bank (receipts)

 

117 500

Dec 31

Sales

116 700

Dec 31

Balance c/d

18 400

135 900

135 900

2024

Jan 1

 

Balance b/d

 

18 400

Find the total sales by adding the credit sales to the cash sales.

Total sales = $116 700 + $38 000 = $154 700

Find the credit purchases by using a purchases ledger control account. The credit purchases will be the balancing figure.

Date

Details

$

Date

Details

$

2023

Dec 31

Bank (payments)

72 600

2023

Jan 1

Balance b/d

20 800

Dec 31

Balance c/d

16 000

Dec 31

Purchases

67 800

88 600

88 600

2024

Jan 1

Balance b/d

16 000

Find the total purchases by adding the credit purchases to the cash purchases.

Total purchases = $67 800 + $12 200 = $80 000

Prepare the trading section of the income statement using the usual format.

Mini

Income Statement for the year ended 31 December 2023

$

$

Revenue

154 700

Less: Cost of sales

     Opening inventory

35 600

     Purchases

80 000

115 600

     Less: Closing inventory

39 800

75 800

Gross profit

78 900

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