Lesson Note on Account Control: Sales and Purchases Ledger Control Accounts for SSS 2

Class: Senior Secondary School 2 (SS2 / SSS2)
Term: First Term
Week: 10
Age: 16 years
Duration: 45 minutes
Subject: Financial Accounting
Curriculum Theme: Accounting Systems and Controls
Previous Lesson: Bank Reconciliation Statement: Adjusted Cash Book and Overdraft.
Topic: REVISIT ACCOUNT CONTROL
Subject Matter: Sales ledger control account, purchases ledger control account

Specific Objectives

By the end of the lesson, pupils should be able to:

Cognitive Domain:

• Define sales ledger control account and purchases ledger control account.
• Identify typical items that appear in a sales ledger control account.
• Identify typical items that appear in a purchases ledger control account.

Affective Domain:

• Appreciate the importance of control accounts in maintaining accurate financial records.
• Develop an interest in preparing control accounts correctly.

Psychomotor Domain:

• Prepare a sales ledger control account from given information.
• Prepare a purchases ledger control account from given information.

Social Domain:

• Collaborate effectively when discussing control account entries.
• Communicate clearly about the principles of control accounts.

Reference Materials

The following resources were used in planning this lesson:

• Senior Secondary Schools Education Curriculum
• State Unified Scheme of Work
• Financial Accounting for Senior Secondary Schools by O.A. Longe

Instructional Materials

The teacher will teach this lesson with the aid of:

• Charts showing formats of sales ledger control account and purchases ledger control account.
• Whiteboard or chalkboard.
• Markers or chalk.
• Financial Accounting textbooks.

Rationale for the Lesson

This lesson helps pupils understand how control accounts are used to summarize individual ledger balances, providing a check on the accuracy of the main ledger and assisting in the detection of errors. It is important for maintaining internal control and efficiency in accounting systems.

Prerequisite/Previous Knowledge

Pupils should have knowledge of the double entry system, ledger accounts, and the preparation of a trial balance.

Lesson Content/Board Summary

ACCOUNT CONTROL

1. Sales Ledger Control Account

A Sales Ledger Control Account (also known as a Debtors Control Account or Total Debtors Account) is a summary account in the general ledger. It contains the total of all transactions affecting the individual debtors’ accounts in the sales ledger. It is used to check the arithmetic accuracy of the sales ledger.

Reasons for keeping a Sales Ledger Control Account:

• To provide a check on the arithmetic accuracy of the sales ledger.
• To locate errors more easily by reconciling the control account balance with the sum of individual debtors’ balances.
• To provide internal control by separating duties between the clerk keeping the sales ledger and the clerk keeping the general ledger.
• To provide a total figure for debtors for the trial balance and statement of financial position.

Typical Entries in a Sales Ledger Control Account:

• Debit Side:
  • Opening balance (debtors at start of period)
  • Credit sales (total for the period)
  • Dishonoured cheques (returned cheques from debtors)
  • Interest charged on overdue accounts
• Credit Side:
  • Cash/bank received from debtors
  • Discounts allowed to debtors
  • Sales returns (returns inwards)
  • Bad debts written off
  • Closing balance (debtors at end of period)
  • Contra entries (set-off against amounts owed by the business)

Example 1: Sales Ledger Control Account

SALES LEDGER CONTROL ACCOUNT
| Details           | N      | Details           | N      |
|-------------------|--------|-------------------|--------|
| Bal b/d           | 10,000 | Cash from Debtors | 80,000 |
| Credit Sales      | 90,000 | Discount Allowed  | 2,000  |
| Dishonoured Cheque| 1,000  | Sales Returns     | 3,000  |
|                   |        | Bad Debts         | 1,500  |
|                   |        | Bal c/d           | 14,500 |
|-------------------|--------|-------------------|--------|
|                   | 101,000|                   | 101,000|
|-------------------|--------|-------------------|--------|
| Bal b/d           | 14,500 |                   |        |

Step 1: Enter the opening balance on the debit side.
Step 2: Add credit sales and dishonoured cheques to the debit side.
Step 3: Enter cash received, discounts, sales returns, and bad debts on the credit side.
Step 4: Balance the account to find the closing balance (Bal c/d) on the credit side.

2. Purchases Ledger Control Account

A Purchases Ledger Control Account (also known as a Creditors Control Account or Total Creditors Account) is a summary account in the general ledger. It contains the total of all transactions affecting the individual creditors’ accounts in the purchases ledger. It is used to check the arithmetic accuracy of the purchases ledger.

Reasons for keeping a Purchases Ledger Control Account:

• To provide a check on the arithmetic accuracy of the purchases ledger.
• To locate errors more easily by reconciling the control account balance with the sum of individual creditors’ balances.
• To provide internal control by separating duties between the clerk keeping the purchases ledger and the clerk keeping the general ledger.
• To provide a total figure for creditors for the trial balance and statement of financial position.

Typical Entries in a Purchases Ledger Control Account:

• Debit Side:
  • Cash/bank paid to creditors
  • Discounts received from creditors
  • Purchases returns (returns outwards)
  • Contra entries (set-off against amounts owed to the business)
  • Closing balance (creditors at end of period)
• Credit Side:
  • Opening balance (creditors at start of period)
  • Credit purchases (total for the period)
  • Interest charged by suppliers

Example 2: Purchases Ledger Control Account

PURCHASES LEDGER CONTROL ACCOUNT
| Details           | N      | Details           | N      |
|-------------------|--------|-------------------|--------|
| Cash to Creditors | 50,000 | Bal b/d           | 15,000 |
| Discount Received | 1,000  | Credit Purchases  | 55,000 |
| Purchase Returns  | 2,500  |                   |        |
| Bal c/d           | 16,500 |                   |        |
|-------------------|--------|-------------------|--------|
|                   | 70,000 |                   | 70,000 |
|-------------------|--------|-------------------|--------|
|                   |        | Bal b/d           | 16,500 |

Step 1: Enter the opening balance on the credit side.
Step 2: Add credit purchases to the credit side.
Step 3: Enter cash paid, discounts received, and purchases returns on the debit side.
Step 4: Balance the account to find the closing balance (Bal c/d) on the debit side.

Teaching Methods/Instructional Techniques

Discussion, Lecture, Demonstration, Question and Answer, Visual Aids

Instructional Procedures

Step 1: Introduction

Time: 5 minutes
Teaching Skill: Set Induction
Teacher’s Activity: The teacher greets the pupils and reminds them of the previous lesson on ledgers and trial balance. The teacher then asks pupils what they remember about debtors and creditors.
Pupils’ Activity: Pupils respond to the teacher’s greetings and questions, recalling previous knowledge.
Learning Point: Pupils recall prior knowledge of basic accounting concepts.

Step 2: Explanation of Control Accounts

Time: 5 minutes
Teaching Skill: Explanation
Teacher’s Activity: The teacher introduces the topic of control accounts, explaining their purpose as summary accounts used to check the accuracy of individual ledgers.
Pupils’ Activity: Pupils listen attentively and ask questions for clarification.
Learning Point: Pupils understand the general concept and purpose of control accounts.

Step 3: Sales Ledger Control Account

Time: 10 minutes
Teaching Skill: Demonstration/Explanation
Teacher’s Activity: The teacher explains what a sales ledger control account is, its importance, and the typical items found on its debit and credit sides using charts. The teacher guides pupils to identify sales ledger items.
Pupils’ Activity: Pupils observe the charts, identify the items, and take notes.
Learning Point: Pupils understand the definition, importance, and components of a sales ledger control account.

Step 4: Worked Example (Sales Ledger Control Account)

Time: 5 minutes
Teaching Skill: Guided Practice
Teacher’s Activity: The teacher presents a simple example and guides pupils through the preparation of a sales ledger control account on the board, explaining each entry step-by-step.
Pupils’ Activity: Pupils actively participate in preparing the account, asking questions, and copying the example.
Learning Point: Pupils gain practical experience in preparing a sales ledger control account.

Step 5: Purchases Ledger Control Account

Time: 10 minutes
Teaching Skill: Demonstration/Explanation
Teacher’s Activity: The teacher explains what a purchases ledger control account is, its importance, and the typical items found on its debit and credit sides, again using charts. The teacher guides pupils to identify purchases ledger items.
Pupils’ Activity: Pupils observe the charts, identify the items, and take notes.
Learning Point: Pupils understand the definition, importance, and components of a purchases ledger control account.

Step 6: Worked Example (Purchases Ledger Control Account)

Time: 5 minutes
Teaching Skill: Guided Practice
Teacher’s Activity: The teacher presents another simple example and guides pupils through the preparation of a purchases ledger control account on the board, explaining each entry.
Pupils’ Activity: Pupils actively participate in preparing the account, asking questions, and copying the example.
Learning Point: Pupils gain practical experience in preparing a purchases ledger control account.

Step 7: Evaluation/Review

Time: 5 minutes
Teaching Skill: Questioning/Assessment
Teacher’s Activity: The teacher evaluates the learning by asking the following questions:

1. Define a Sales Ledger Control Account.
2. State two reasons for keeping control accounts.
3. Mention three items that would typically appear on the debit side of a Sales Ledger Control Account.
4. Mention three items that would typically appear on the credit side of a Purchases Ledger Control Account.

Pupils’ Activity: Pupils answer orally and in writing.
Learning Point: Pupils demonstrate understanding of the lesson.

Step 8: Conclusion

Time: 5 minutes
Teaching Skill: Summarization
Teacher’s Activity: The teacher summarizes the key points of the lesson, reiterating the importance of control accounts for accuracy and internal control. The teacher assigns homework for pupils to practice preparing both control accounts.
Pupils’ Activity: Pupils listen to the summary and copy down the homework assignment.
Learning Point: Pupils consolidate their understanding of control accounts.

Lesson Keywords

• Sales Ledger – A subsidiary ledger that contains the individual accounts of credit customers (debtors).
• Purchases Ledger – A subsidiary ledger that contains the individual accounts of credit suppliers (creditors).
• Control Account – A summary account in the general ledger that checks the arithmetic accuracy of a subsidiary ledger.
• Debtors – Individuals or entities who owe money to the business.
• Creditors – Individuals or entities to whom the business owes money.

Differentiation

For pupils who grasp the concept quickly, the teacher can provide more complex scenarios or ask them to explain the reconciliation process. For pupils who need more support, the teacher will provide additional guided practice with simpler figures and individualized attention.

Note for teachers using this lesson plan

Ensure that pupils have a solid understanding of basic double-entry principles before introducing control accounts. Emphasize the relationship between the control account in the general ledger and the individual accounts in the subsidiary ledgers. Encourage pupils to practice with various examples to master the entries and balancing of these accounts.