Calculating Values using Control Accounts (Cambridge International IGCSE Accounting)

Calculating values using control accounts

How can I use a ledger account to find a missing value?

• If you are missing just one value from an account then you can find it

• STEP 1 Draw up the ledger account

• STEP 2 Fill in the known values

• STEP 3 Find the balancing figure for the account

  • This is the missing value

What information can I find using a sales ledger control account?

• You can use a sales ledger control account to find the following information:

  • The trade receivables balance at the start of the financial year
  • The trade receivables balance at the end of the financial year
  • Credit sales
  • Credit sales returns
  • Receipts from trade receivables during the year
  • Discount allowed to trade receivables
  • Irrecoverable debts written off

Layout of a sales ledger control account

Exam Hint Exam questions commonly ask you to find the value of the credit sales.

Credit sales = payments from credit customers

• opening trade receivables

• closing trade receivables
• cash discounts allowed
• credit sales returns
• irrecoverable debts written off
• contra entries

• interested charged to credit customers

What information can I find using a purchases ledger control account?

• You can use a purchases ledger control account to find the following information:

  • The trade payables balance at the start of the financial year
  • The trade payables balance at the end of the financial year
  • Credit purchases
  • Credit purchases returns
  • Payments to trade payables during the year
  • Discount received from trade payables

Layout of a purchases ledger control account

Exam Hint Exam questions commonly ask you to find the value of the credit purchases.

Credit purchases = payments to credit suppliers

• opening trade payables

• closing trade payables
• cash discounts received
• credit purchases returns
• contra entries

• interested charged by credit suppliers

What information can I find using a cash book?

• You can use a cash book to find the following information:

  • Amounts paid by the business

    • Cash purchases
    • Expenses
    • Payments to trade payables
    • Drawings

  • Amounts received by the business

    • Cash sales
    • Income
    • Receipts from trade receivables
    • Capital introduced

Layout of a cash book

Exam Hint Remember sales and purchases can be made on a credit or cash basis.

Total sales = Credit sales + Cash sales

Total purchases = Credit purchases + Cash purchases

Worked Example Mini is a sole trader who does not keep full accounting records. Mini provided the following information.

	1 January 2023 $**	31 December 2023 $
Shop fittings	9 000	9 000
Inventory	35 600	39 800
Trade receivables	19 200	18 400
Bank	6 000	9 600
Trade payables	20 800	16 000
Expenses owing	300	420

Receipts and payment summary for the year ended 31 December 2023:

	$
Receipts from trade receivables	117 500
Payments to trade payables	72 600
Drawings	33 500
General expenses	30 600
Purchase of shop fittings	3 000
Cash sales	38 000
Cash purchases	12 200

No cash discount was allowed or received during the year.

Prepare the trading section of the income statement for Mini for the year ended 31 December 2023.

Answer:

• Find the credit sales by using a sales ledger control account

  • The credit sales will be the balancing figure

Date	Details	$*	Date	Details	*$
2023 Jan 1	* * Balance b/d	* * 19 200	2023 Dec 31	* * Bank (receipts)	* * 117 500
Dec 31	Sales	116 700	Dec 31	Balance c/d	18 400
		135 900			135 900
2024 Jan 1	* * Balance b/d	* * 18 400

• Find the total sales by adding the credit sales to the cash sales

Total sales = $116 700 + $38 000 = $154 700

• Find the credit purchases by using a purchases ledger control account

  • The credit purchases will be the balancing figure

Date	Details	$***	Date	Details	*$
2023 Dec 31	* * Bank (payments)	* * 72 600	2023 Jan 1	Balance b/d	* * 20 800
Dec 31	Balance c/d	16 000	Dec 31	Purchases	67 800
		88 600			88 600
			2024 Jan 1	* * Balance b/d	* * 16 000

• Find the total purchases by adding the credit purchases to the cash purchases

Total purchases = $67 800 + $12 200 = $80 000

• Prepare the trading section of the income statement using the usual format

Final answer: Mini Final answer: Income Statement for the year ended 31 December 2023
	Final answer: $**	Final answer: $
Final answer: Revenue		Final answer: 154 700
Final answer: Less: Cost of sales
Final answer:** Opening inventory **	Final answer: 35 600
Final answer:** Purchases **	Final answer: 80 000
	Final answer: 115 600
Final answer:** Less: Closing inventory	Final answer: 39 800	Final answer: 75 800
Final answer: Gross profit		Final answer: 78 900