TRADE PAYABLES CONTROL ACCOUNT
The Trade Payables control account is an account in the FINANCIAL POSITION SECTION
of the General Ledger. This account is classified as a CURRENT LIABILITY as the money
owed will be paid within the twelve-month period. It is a summary of all the transactions
with the individual creditors
At the end of the month, the totals of the journals are posted to the General Ledger.
A control account is a summary account in the General Ledger. The details that support
the balance in the summary account are in the Trade Payables Ledger (a subsidiary
ledger).
EXAMPLE
GENERAL LEDGER OF DRAGON DEALERS
FINANCIAL POSITION SECTION
“CURRENT LIABILITY”
Trade Payables Control
Sep 30 Bank and CPJ 5. Sep 01 Balance b/d 1.
settlement discount
received
[money paid to creditor [money owed to
and discount received creditors at the
for prompt payment] BEGINNING of month]
Sundry Allowances PRJ 6. 30 Sundry Purchases PJ 2.
[settlement
discount received - [credit purchases]
creditors for items
returned]
Journal debits* GJ 7. Journal credits* GJ 3.
[transfers [transfers
Correction of errors Correction of errors
Interest charged]
Balance c/d 8. Bank CRJ 4.
[money owed to
creditors at the END of [Money received from a
month] creditor]
xxxx xxxx
Oct 1 Balance b/d 8
[money owed to
creditors at the
BEGINNING of month]
NOTE: *Journal debits and Journal credits could also be written as “Sundry Accounts”.
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NOTES:
1. The amount owed to creditors at the beginning of the month (balance b/d).
2. Credit purchases for the month – source document: original invoice
3. Journal credits OR SUNDRY ACCOUNTS
A creditor charges interest on the business’
Transfers between trade receivables and trade payables
Correction of errors
4. Money received from a creditor, e.g. a creditor with a debit balance.
5. Money that was paid to a creditor with a cheque and discount was received
= source document - cheque counterfoil
6. Total settlement discount received from creditors for items returned to them during the
month – source document – duplicate debit note.
7. Journal Debits - (journal narration)
Transfers between trade receivables and trade payables
Correction of errors
8. Amount owed to creditors at the end of the month (Balance c/d).
9. How do you as a bookkeeper verify this balance?
The balance of the trade payables control account in the General ledger is checked
against the Trade Payables List (which shows the balances of the individual
creditor’s accounts in the Trade Payables Ledger)
GENERAL LEDGER OF DRAGON DEALERS
FINANCIAL POSITION SECTION
“CURRENT LIABILITY”
DR Trade Payables Control CR
Sep 30 Bank and CPJ 8 250 Sep 01 Balance b/d 39 654
settlement
discount
received
Sundry ? 340 30 ? PJ 15 200
Allowances
? GJ 200 Journal credits* ? 500
Balance c/d ? CRJ 300
55 654 55 654
Oct 1 Balance b/d
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NOTE: Journal debits and Journal credits could also be written as SUNDRY ACCOUNTS
QUESTIONS:
1. Calculate the amount owing by Dragon Dealers on 01 October. (2)
2. How do you as their bookkeeper verify this balance? (2)
3. State the folio references for the following contra-accounts:
3.1 Sundry Allowances (1)
3.2 Journal credits (1)
4. Name the contra-account for the amount of:
4.1. R15 200 on the credit side of the account. (2)
4.2 R200 on the debit side of the account. (2)
4.3 R300 on the credit side of the account. (2)
5. Describe ONE transaction that could possibly give rise to the entry of R340 on the
debit side of the account. (2)
6. State the source document for the following entries:
6.1 R15 200 on the credit side (2)
6.2 R8 250 on the debit side (2)
7. The business received R250 settlement discount for prompt payment of their account.
What is the actual amount paid in cash to creditors? (2)
8. What type of account is trade payables control? (2)
9. Give TWO possible reasons for the account being credited with R500. (4)
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MEMORANDUM
QUESTIONS:
1. Calculate the amount owing by Dragon Dealers on 01 October. (2)
55 654 – 8 250-340-200
= 46 864√√
2. How do you as their bookkeeper verify this balance? (2)
The balance of the trade payables control account in the General ledger is checked
against the Trade Payables List (which shows the balances of the individual creditor’s
accounts in the Trade Payables Ledger) √√
3. State the folio references for the following contra-accounts:
3.1 Sundry Allowances (1)
PRJ √
3.2 Journal credits (1)
GJ √
4. Name the contra-account for the amount of:
4.1. R15 200 on the credit side of the account. (2)
SUNDRY PURCHASES √√
4.2 R200 on the debit side of the account. (2)
JOURNAL DEBITS OR SUNDRY ACCOUNTS√√
4.3 R300 on the credit side of the account. (2)
BANK √√
5. Describe ONE transaction that could possibly give rise to the entry of R340 on the
debit side of the account. (2)
SETTLEMENT DISCOUNT RECEIVED FROM CREDITORS FOR ITEMS
RETURNED/DISCOUNT √√
6. State the source document for the following entries:
6.1 R15 200 on the credit side (2)
ORIGINAL INVOICE
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6.2 R8 250 on the debit side (2)
CHEQUE COUNTERFOIL√√
7. The business received R250 settlement discount for prompt payment of their account.
What is the actual amount paid in cash to creditors? (2)
8 250 – 250
= 8 000√√
8. What type of account is trade payables control? (2)
CURRENT LIABILITY√√
9. Give TWO possible reasons for the account being credited with R500. (4)
A creditor charges interest on the business’
Transfers between trade receivables and trade payables
Correction of errors √√√√ (any 2x2)
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