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Difficulty: EasySales Ledger Control Account

In the preparation of a Sales Ledger Control Account, on which side of the account should the total discount allowed to credit customers be recorded?

  1. Credit sideAnswer
  2. B
    Debit side
  3. C
    Excluded entirely from the control account
  4. D
    Debit side of the Purchases Ledger Control Account

Answer

Credit side
The Sales Ledger Control Account summarizes total trade debtors (an asset). Because discount allowed reduces the total amount owed by debtors, it is credited to the Sales Ledger Control Account.

Step-by-Step Solution

1
Identify how discount allowed affects customer debt
Discount allowed reduces the total amount owed by credit debtors to the business.
When customers pay early and receive a discount, their remaining liability decreases.
2
Determine the correct posting side in the Sales Ledger Control Account
Items that decrease total debtor balances are posted to the credit side.
The Sales Ledger Control Account carries a normal debit balance, so decreases in asset value are credited.

Key Concept

Rules of entry in the Sales Ledger Control Account
Estimated Time:45s
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Topics

Sales Ledger Control Account

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