Purchases Ledger Control Account

Purchases ledger control accounts

A purchase ledger control account is also known as a Trade creditors control account. It shows the total purchases along with discounts received on purchases and the purchase returns for a specific period.

Simply we can say that it tells how much a business owes to the suppliers of a business at a particular time period. It means the aggregate accounts payable are included in this control account.

Format of Purchases ledger account

DR	PURCHASES LEDGER CONTROL ACCOUNT				CR
Balance b/d		xxx	Balance b/d		xxx
Cash/bank		xxx	Credit purchases		xxx
Discount received		xxx	Dishonoured Cheque		xxx
Bill payable		xxx	Bill dishonoured		xxx
Returns outward		xxx	Carriage charges		xxx
Transfer to/from purchase ledger		xxx	Refund overdue		xxx
Sales ledger		xxx	Noting charges		xxx
Balance c/d		xxx	Transfer to/from Purchases ledger		xxx
Credit balance c/d		xxx	Sales ledger		xxx
			Debit Balance c/d		xxx

Example

From the following particulars extracted from the books of a trader, prepare total accounts receivable and total accounts payable for the year ending 30th November 2012.

Balance on 1st January 2012:	Sh
Sales - Cash	344,890
- Credit	268,187
Purchases - Cash	14,440
- Credit	496,600
Total receipts from customers	600,570
Total payments to suppliers	503,970
Discount allowed (all to credit customers)	5,520
Discount received (all from credit suppliers)	3,510
Refund given to cash customers	5,070
Balance in the sales ledger set off against
balance in the purchases ledger	70
Bad debts written-off	780
Increase in the allowance for doubtful debts	90
Credit notes issued to credit customers	4,140
Credit notes received from credit suppliers	1,480

According to the audited financial statements for the previous year accounts receivable and accounts payable as at 1st December, 2011 were Tshs. 26,555 and Tshs. 43,450 respectively

Solution

DR	ACCOUNT PAYABLE	CR
Date	Details	Amount
Payments to suppliers	503,970	1/1/12
Discount received	3,510
Set-off	70
1/1/12	Balance c/d	33,980
	541,530

DR	ACCOUNT RECEIVABLE	CR
Date	Details	Amount
1/1/12	Bal. b/d	26,555
Refund	5,070
Credit sales	268,187
Bal. c/d	311,268
	611,080