Reconciliation Statements Between Control & Ledger Accounts (Cambridge (CIE) AS Accounting): Revision Note
Exam code: 9706
Reconciliation statements between control & ledger accounts
Why might the total balance from ledger accounts differ from the balance of the control account?
The ledger accounts and/or the control account might contain errors
Errors which affect the total balance of the personal accounts include:
Transactions which are posted incorrectly from the books of prime entry
E.g. errors of reversal and errors of principle
Arithmetic/addition errors in the ledger accounts
Errors which affect the balance of the control account include:
Arithmetic/addition errors in the control account
Some errors can still be present even if the balances agree
Errors of commission
Errors of omission
Errors of original entry
Compensating errors
How do I reconcile the total balance from ledger accounts with the balance of the control account?
You might have to reconcile the total balance of the ledger accounts with the control account
You correct each balance separately and show that the revised balances agree
Make sure you know exactly which errors affect which totals
The table below shows a summary
Error | Affects the control account balance? | Affects the total balance of the ledger accounts? |
|---|---|---|
The total of a book of prime entry has been incorrectly calculated | Yes | No |
A transaction has not been entered into the books of prime entry | Yes | Yes |
A transaction has been entered into the books of prime entry with an incorrect amount | Yes | Yes |
A transaction has been posted to the wrong personal account | No | No (the total is still the same) |
A transaction has been recorded correctly in the books of prime entry but posted incorrectly to the personal accounts | No | Yes |
An error has been made when balancing a personal account | No | Yes |
Worked Example
Gaz is a sole trader, and he maintains control accounts as a part of the double entry.
On 31 January 2026, the following information was available.
$ | |
Total of balances in the sales ledger | 28 150 |
Sales ledger control account balance | 29 530 |
The following errors were discovered, which accounted for the difference.
A credit note issued by Gaz has been recorded in the books of prime entry as $230 instead of $320.
The balance of a credit customer's ledger account had been understated by $250.
The discount allowed column in the cash book totalled $140 and had not been posted to the sales ledger control account.
An irrecoverable debt of $450 had been recorded correctly in the customer's ledger account but had been debited to the sales ledger control account as $540.
No entries had been made in the books of account to record a dishonoured cheque for $190.
Calculate the corrected figure for:
(i) the total of balances in the sales ledger
(ii) the sales ledger control account balance
Answer:
Determine how each error affects the total balance in the sales ledger and the sales ledger control account balance
Error | The total of balances in the sales ledger | The sales ledger control account balance |
|---|---|---|
1 - The sales returns had been recorded as $90 too low in the ledger accounts and the control account. | This causes the customer's ledger account balance to be overstated by $90. | This causes the control account balance to be overstated by $90. |
2 | This causes the customer's ledger account balance to be understated by $250. | No effect on the control account balance. |
3 - Discount allowed lowers the balance of the sales ledger control account. | No effect on the balances of the ledger accounts. | This causes the control account balance to be overstated by $140. |
4 - The irrecoverable debt should be recorded on the credit side of the sales ledger control account. The debit entry needs to be removed and the amount added to the credit side, which lowers the balance. | No effect on the balances of the ledger accounts. | This causes the control account balance to be overstated by $990. |
5 - A dishonoured cheque increases the amount Gaz is owed by the credit customers. | This causes the customer's ledger account balance to be understated by $190. | This causes the control account balance to be understated by $190. |
(i)
$ | |
Original total of balances in the sales ledger | 28 150 |
Less sales returns | (90) |
Add understated balance | 250 |
Add dishonoured cheque | 190 |
Correct total of balances in the sales ledger | 28 500 |
(ii)
$ | |
Original sales ledger control account balance | 29 530 |
Less sales returns | (90) |
Less discount allowed | (140) |
Less irrecoverable debt | (990) |
Add dishonoured cheque | 190 |
Correct sales ledger control account balance | 28 500 |
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