Sales Ledger Control Account Transactions

Steps:

• Identify the sales ledger control account as summarizing gross trade receivables in the general ledger.
• Note debits include credit sales and dishonoured cheques, increasing receivables.
• Note credits include returns inwards, settlement discounts, and bad debts written off, decreasing receivables.
• Exclude provisions like allowances, which adjust net receivables separately in financial statements.

Why A is correct:

• Allowance for irrecoverable debts is a provision that estimates uncollectible amounts and is recorded in a separate contra account, not as a direct entry in the sales ledger control account, which tracks gross debtor balances per accounting standards.

Why the others are wrong:

• B: Dishonoured cheques reverse cash receipts and debit the control account to reinstate the receivable.
• C: Returns inwards credit the control account to reduce outstanding receivables from faulty goods.
• D: Settlement discounts (allowed to debtors) credit the control account as an expense reducing receivables.

Final answer: A