Question 1
A business maintains a full set of accounting records including separate sales ledger
(receivables) and purchases ledger (payables). For the month of August 2025, the following
information is available:
Detail Amount
(£)
Opening balance, trade receivables ledger control account (debit) 42,000
Opening balance, trade payables ledger control account (credit) 15,000
Credit sales during August 98,500
Sales returns (credit customers) 2,200
Receipts from credit customers (bank) 84,300
Discounts allowed to credit customers 1,500
Irrecoverable debts written off 800
Credit purchases from suppliers 56,400
Purchases returns (to suppliers) 1,200
Payments to credit suppliers (bank) 52,600
Discounts received from suppliers 1,100
Interest charged by suppliers on overdue accounts 250
Contra entries between receivables and payables (i.e., a supplier also a 1,400
customer)
Required:
a) Prepare the Trade Receivables Ledger Control Account for August 2025.
b) Prepare the Trade Payables Ledger Control Account for August 2025.
c) State and explain two reasons why a business uses control accounts.
d) If the total of the individual receivables ledger accounts (sub-ledgers) as at 31 August is
£53,000, explain what the difference (if any) suggests.
Question 2
Patterson Ltd uses control accounts. At 1 September 2024, the balances in the control
accounts were:
● Trade receivables control (debit) £38,000
● Trade payables control (credit) £22,300
During the month ended 30 September 2024, the following transactions occurred:
1. Credit sales £67,800
2. Sales returns from credit customers £1,500
3. Cash receipts from credit customers (bank) £55,400
4. Discounts allowed to credit customers £1,200
5. Irrecoverable debts (written off) £600
6. Credit purchases £41,800
7. Purchases returns £1,100
8. Payments to credit suppliers £38,500 (bank)
9. Discounts received from suppliers £900
10.Interest charged by suppliers on overdue accounts £150
11.A supplier (X Ltd) had a credit balance in Patterson’s books but also a customer — a
contra was agreed for £1,000
Required:
1. Prepare Patterson Ltd’s Receivables Ledger Control Account for September 2024.
2. Prepare Patterson Ltd’s Payables Ledger Control Account for September 2024.
3. A check of the receivables sub-ledger shows a total of £46,100. Comment on any
discrepancy between the control account balance and the sub-ledger total, stating
possible causes.
4. State one limitation of using control accounts in detecting errors.
Question 3 (Simplified)
The following information was taken from the books of Young Traders for the year ended 31
December 2024.
Details Amount
(£)
Opening trade receivables 24,500
(debit)
Opening trade payables 13,400
(credit)
Credit sales 91,000
Credit purchases 50,400
Receipts from customers 84,000
(bank)
Payments to suppliers (bank) 44,500
Sales returns 1,000
Purchases returns 600
Discounts allowed 550
Discounts received 250
Irrecoverable debts written 300
off
Interest charged by suppliers 100
Information:At 31 December 2024,
● the total of customers’ accounts in the receivables ledger was £30,500, and
● the total of suppliers’ accounts in the payables ledger was £14,200.
Required:
a) Prepare the Trade Receivables Control Account for the year ended 31 December 2024.
b) Prepare the Trade Payables Control Account for the same period.
c) Compare your closing balances with the totals from the individual ledgers and state one
possible reason for any difference.
d) Explain one advantage of maintaining control accounts.
5.