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Account numbers are as follows: 

RL 4  Personal account: A Arnold 

RL 9  Personal account: B Bagshaw 

RL 13 Personal account: C Cloning 

NL 6  Receivables control account 

NL 21 Sales: hardware 

NL 22 Sales: electrical 

NL 1  Cash at bank 

OBC expects A Arnold and B Baghsaw to take up the discounts, therefore revenue for these sales should be 

recorded net of the discounts. As OBC does not expect C Cloning to take up the discount, revenue is recorded 

at the full invoiced amount. The accounting entries would be as follows: 

 

SALES DAY BOOK 

SDB 35 

Date Name 

Ref. 

Invoiced 

amt 

Discounts 

allowed 

Net sales 

revenue 

Hardware 

Electrical 

20X2 

 

 

$ 

$   

  $   

  

$ 

  

$    

3 July 

A Arnold 

RL 4 Dr 100.00 

10.00 

 

 90.00 

  

90.00 

 

11 July  B Bagshaw  RL 9 Dr 150.00 

15.00 

 

 135.00 – 

  

135.00 

15 July  C Cloning 

RL 13 Dr 

 250.00 

        – 

 250.00 

  

250.00 

         – 

 

 

 

 500.00 

 25.00 

 475.00 

  

340.00 

  

135.00 

 

 

 

 

 

 

 

  NL 6 Dr 

NL 21 Cr 

NL 22 Cr 

Note. The personal accounts in the receivables ledger are debited on the day the invoices are sent out. 

The double entry in the ledger accounts might be made at the end of each day, week or month; here it is 

made at the end of the month, by posting from the sales day book as follows. 

 

 

 

 

$ 

 

$ 

DEBIT 

 

NL 6 

 

Receivables control account 

 

475 

 

CREDIT 

 

NL 21 

 

Sales: hardware 

 

 

340 

 

 

NL 22 

 

Sales: electrical 

 

 

135 

 

 

CASH BOOK EXTRACT 

 

RECEIPTS – JULY 20X2 

CB 23 

 

Date 

 

Narrative 

 

Ref. 

 

Total 

Discount 

not taken 

(hardware 

sales) 

Discount 

not taken 

(electrical 

sales) 

Accounts 

receivable 

20X2  

 

 

$ 

$ 

 

$ 

 

$ 

10 July 

A Arnold 

RL 4 Cr 

 

90.00 –  

– 

 

90.00 

20 July 

B Bagshaw 

RL 9 Cr 

15

150.00 

– 

15.00 

 

135.00 

28 July 

C Cloning 

RL 13 Cr 

  

250.00 

         – 

      

 

  – 

  

250.00 

 

 

 

  

490.00 

         – 

 15.00 

  

475.00 

 

 

 

  

NL 1 Dr 

 

NL 21 Cr NL 

22 

Cr 

  

NL 6 Cr 

At the end of July, the cash book is posted to the nominal ledger. 

  

$ 

$ 

DEBIT 

Cash at bank 

490.00 

 

CREDIT 

Receivables control account 

Sales: electrical 

 475.00 

15.00 

Note. The personal accounts in the receivables ledger are memorandum accounts, because they are not 

a part of the double entry system. 

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PART E: PREPARING A TRIAL BALANCE 

 

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MEMORANDUM RECEIVABLES LEDGER 

 

A ARNOLD 

A/c no: RL 4 

Date Narrative 

Ref. 

$ 

Date 

Narrative 

Ref. 

$ 

20X2 

 

 

 

20X2 

 

 

 

3 July 

 

Sales 

 

SDB 35 

 

90.00 

10 July  

 Cash 

 CB 23 

 90.00 

 

 

 

    

            

 

 

 

            

 

 

 

 

90.00 

 

 

 

 90.00 

 

B BAGSHAW 

 A/c no: RL 9 

Date 

 

Narrative 

 

Ref. 

$ 

 

Date 

 

Narrative 

 

Ref. 

$ 

20X2 

 

 

 

 

20X2 

 

 

 

11 July 

Sales 

SDB 35 

 

135.00 

 

20 July 

 

Cash 

 

CB 23 

 

150.00 

20 July 

Discount  

   not taken  CB 23 

 

  15.00     

 

 

 

 

 

 

 

 

 

150.00 

 

 

 

 

150.00 

 

 

 

 

 

 

 

 

 

C CLONING 

A/c no: RL 13 

Date 

 

Narrative 

 

Ref. 

$ 

 

Date 

 

Narrative 

 

Ref. 

$ 

20X2 

 

 

 

 

20X2 

 

 

 

15 July 

 

Sales 

 

SDB 35 

 

250.00 

 

28 July  

 

Cash 

 

CB 23 

 

250.00 

 

 

 

 

            

 

 

 

 

 

 

 

 

250.00   

 

 

 

250.00 

 

 

 

 

 

 

 

 

In the nominal ledger, the accounting entries are made from the books of prime entry to the ledger 

accounts, in this example at the end of the month. 

 

NOMINAL LEDGER (EXTRACT) 

  

RECEIVABLES LEDGER CONTROL ACCOUNT 

A/c no: NL 6 

Date 

 

Narrative 

 

Ref. 

$ 

 

Date 

 

Narrative 

 

Ref. 

$ 

20X2 

 

 

 

 

20X2 

 

 

 

31 July 

 

Sales 

 

SDB 35 

 

475.00 

 

31 Jul  

 

Cash  

 CB 23 

475.00 

 

 

 

 

              

 

 

 

 

 

 

 

475.00   

 

 

 

475.00 

 

 

 

 

 

 

 

 

Note. At 31 July the closing balance on the receivables control account ($0) is the same as the total of 

the individual balances on the personal accounts in the receivables ledger ($0). 

 

CASH CONTROL ACCOUNT 

A/c no: NL 1 

Date Narrative 

Ref. 

$ 

Date Narrative 

 

Ref. 

$ 

20X2 

  

 

   

 

31 July 

Cash    

   received  CB 23 

490.00 

 

 

 

 

 

SALES: HARDWARE 

A/c no: NL 21 

Date Narrative 

 

Ref. 

$ 

Date Narrative 

Ref.  $ 

  

 

 

20X2 

     

  

 

 

31 

Jul 

 

 

Receivables 

 

SDB 35 

 

340.00 

 

 340.00 

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CHAPTER 14  

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  CONTROL ACCOUNTS 

 

251 

 

SALES: ELECTRICAL  

A/c no: NL 22 

Date Narrative 

 

Ref. 

$ 

Date 

 Narrative 

 Ref. 

$ 

  

 

 

20X2 

   

 

  

 

 

31 

Jul 

31 Jul 

 Receivables 

 Cash 

SDB 35 

CB 23 

135.00 

       15.00 

 150.00 

If we take the balance on the accounts shown in this example as at 31 July 20X2, the trial balance is as 

follows. 

TRIAL BALANCE 

 

Dr 

Cr 

 

 

$     

 

$     

Cash (all receipts) 

 490 

 

Receivables 

–  

Sales: hardware 

 

 340 

Sales: electrical 

        

 150 

 

 490 

 490 

The trial balance is shown here to emphasise the point that a trial balance includes the balances on 

control accounts, but excludes the balances on the personal accounts in the receivables ledger and 

payables ledger. 

3.2 Accounting for payables 

If you are able to follow the example above dealing with the receivables control account, you should have 

no difficulty in dealing with similar examples relating to purchases/payables. If necessary refer back to 

revise the entries made in the purchase day book and payables ledger personal accounts. 

3.3 Entries in control accounts 

Typical entries in the control accounts are listed below. Reference 'Jnl' indicates that the transaction is 

first lodged in the journal before posting to the control account and other accounts indicated. References 

SRDB and PRDB are to sales returns and purchase returns day books respectively. 

RECEIVABLES CONTROL ACCOUNT 

 

  

Ref. 

$     

 

  

Ref. 

$ 

Opening debit balances 

  

b/d 

   

7,000  Opening credit balances  

 

Sales 

  

SDB 

 

52,390 

 

  (if any) 

  

b/d 

      

200

Dishonoured bills or 

 

 

Cash received 

  

CB 

 

53,500

  cheques 

  

Jnl 

   

1,000   

 

Cash paid to clear credit 

 

 

Returns inwards from 

 

  balances 

  

CB 

      

110 

 

  customers 

  

SRDB 

      

800

Interest charged on late  

 

 

Irrecoverable debts 

  

Jnl 

      

300

  paid accounts 

  

Jnl 

        

30   

 

Closing credit balances 

  

c/d 

    

       90 Closing 

debit 

balances 

  

C/d 

 

  5,820

 

 

 

60,620   

 

 

60,620

Debit balances b/d 

 

   

5,820  Credit balances b/d 

 

        

90

Note. Opening credit balances are unusual in the receivables control account. They represent customers 

to whom the business owes money, probably as a result of the overpayment of debts or for advance 

payments of debts for which no invoices have yet been sent.  

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