Cash book updates sales ledger control via discounts

Steps:

• Identify cash book as record of cash receipts/payments, including customer collections.
• Link to control accounts: sales ledger control tracks total receivables, affected by cash inflows.
• Examine choices: focus on transactions involving cash from credit customers.
• Select discount allowed, as it's deducted in cash book receipts, adjusting the control account.

Why A is correct:

• Discount allowed is recorded in the cash book as a reduction from gross cash received from credit customers, directly updating the sales ledger control account per double-entry principles.

Why the others are wrong:

• B: Irrecoverable debts are non-cash write-offs recorded in the sales ledger, not the cash book.
• C: Purchases returns are credit notes in the purchases ledger control account, unrelated to cash transactions.
• D: Interest on overdue accounts is a nominal ledger accrual, not sourced from cash book entries.

Final answer: A