Procedures with regards to control
accounts & subsidiary ledgers
It is very important that a business should have good control over their debtors & creditors.
An individual account is kept for each debtor in the Debtors Ledger & each creditor in
the Creditors Ledger.
A summary of all transactions with debtors & creditors are made in the control
accounts: Debtors Control & Creditors Control accounts in General Ledger.
A Debtors List is compiled from the balances of debtors’ individual accounts in the
Debtors Ledger. This list should be compared to the balance of the Debtors Control
account in the General Ledger.
Transactions with debtors
Credit sales Duplicate invoice DJ
Transactions
with debtors &
creditors take Payment by debtor & discount Duplicate receipt CRJ
place on a allowed
daily basis. Returns by debtor Credit note DAJ
These are
recorded on Dishonoured cheque Debit slip CPJ
source
documents & Interest received, discount Journal voucher GJ
then in the cancelled, bad debts
subsidiary Daily
journals. Transactions with creditors
Credit purchases Original invoice CJ
Payment to creditor & discount Cheque counterfoil CPJ
received
Returns to creditor Debit note CAJ
Interest paid, correction of Journal voucher GJ
errors
Posting from
subsidiary
Subsidiary ledger Journal posted
journals to
Debtors Ledger DJ, DAJ, CRJ, CPJ, GJ Daily
individual
accounts in
Creditors Ledger CJ, CAJ, CPJ, GJ
Debtors &
Creditors
Ledger takes
place on a
daily a basis to
keep accounts
up to date.
, Posting to the Control account Journals posted
control Monthly
Debtors control DJ, DAJ, CRJ, CPJ, GJ
accounts in the Creditors control CJ, CAJ, CPJ, GJ
General
Ledger, takes
place on a
monthly basis, Compile a Debtors & Creditors List at the end of each month, using
as it is a balances in subsidiary ledgers, compare the list totals with balances in
summary of all Debtors Control & Creditors Control accounts in the General Ledger.
the debtors’ &
creditors’
transactions
for that
month.
Monthly
Comparing control accounts to Debtors
& Creditors Lists & correcting errors
If there are differences when comparing control accounts to Debtors & Creditors Lists, an
investigation will be done & all errors and omissions will be corrected.
Error/Omission Example Correction
Error on source An invoice to debtor D Zama was Both the control account & the
documents or in overcast by R240 & entered as such in Debtors List will be incorrect. Deduct
journal entries the DJ. R240 from the debit side of the
Debtors Control account & deduct
R240 from the account of D Zama in
the Debtors List.
A credit note issued to debtor S Both the control account and the
Sindiwe was entered as R200 instead Debtors List will be incorrect. Deduct
of R150 in the DAJ. R50 from Debtor Allowances on the
credit side of the Debtors Control
account & add R50 to the account of
S Sindiwe in the Debtors List.
Incorrect posting to the An amount of R1 240 in the CJ was Only the account on the Creditors List
account of a debtor or posted as R1 420 to the account of is incorrect, not the Creditors Control
creditor Ranjit Traders – it is the correct account. The difference is R180, so
account, but the incorrect amount. R180 should be deducted from the
account of Ranjit Traders in the
Creditors List.
