Purchases Ledger Control Accounts

Purchases ledger control accounts

Purchases ledger control accounts

Where do I find the information to complete a purchases ledger control account?

• The books of prime entry are used to find the totals

• The purchases journal is used to find the total value of credit purchases

• The purchases returns journal is used to find the total value of returned goods

• The cash book is used to find the total values for:

  • Money paid to credit suppliers

  • Money refunded by credit suppliers

  • Cash discounts received from credit suppliers

• The journal is used to find the total values for:

  • Interest charged by credit suppliers on overdue accounts

  • Contra entries against the sales ledger

Why might there be a debit balance in a purchases ledger control account?

• A trade payables account will usually have a credit balance

  • This indicates that the business owes the credit supplier money

• However, a trade payables account could have a debit balance

  • This indicates that the credit supplier owes the business money

• Debit balances can occur when:

  • The business pays credit suppliers in advance

  • The business makes overpayments to credit suppliers

  • The business is owed refunds from the credit suppliers

    • The business has paid for goods and then returned them

• Debit and credit balances are totalled separately in the purchases ledger control account

  • This means there could be two opening balances and two closing balances

What is the layout of a purchases ledger control account?

• The layout looks very similar to the layout of a trade payables ledger account

• The main differences are:

  • There could be two opening balances

  • There could be two closing balances