Sales Ledger Control Accounts (Cambridge (CIE) O Level Accounting)

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

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