Is sales ledger control account a debit or credit?

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Sales Ledger Control Account is generally debited. It is debited if its balance increases & credited if its balance decreases.

First, let me help you understand the meaning of the term Sales Ledger Control Account.

 

Meaning of Sales Ledger Control Account

Sales Ledger Control Account (SLCA) is a summarized ledger of all the trade debtors of the entity. This Control Account typically looks like a “T-account” or a replica of an Individual Trade Receivable (Debtor) account. But instead of containing transactions of invoices, returns, and receipts, etc related to one debtor, it contains summarized transactions of invoices, returns, and receipts, etc related to all the debtors of the business.

Sales Ledger Control Account is also referred to as “Trade Debtors Control Account”.

The balance of SLCA should equal the sum of balances of the individual customer accounts. If discrepancies arise, then they should be investigated.

 

Is Sales Ledger Control Account a debit or credit?

Sales Ledger Control Account indicates the total amount owed to a business entity by all its customers at a particular point in time. Therefore, it is a “short-term asset” for the business entity and forms part of the balance sheet.

As per the Modern approach of accounting – Debit the increase in asset, Credit the decrease in asset.

SLCA is an asset, therefore it is generally debited. It will be debited if its balance increases & credited if balance decreases. Also, it will generally show a debit balance.

 

Example of Sales Ledger Control Account

Suppose the following were during the year transactions with the Debtors Sugar Inc. & Chocolate Inc. along with the outstanding balance as of 31/12/20×2.

Particulars Sugar Inc. Chocolate Inc.
Opening balance 140,000
Credit Sales 250,000 400,000
Discount allowed 10,000 30,000
Sales returns 15,000 10,000
Payment received 95,000 120,000
Bad Debts 30,000
Interest charged on the overdue amount 10,000
Dishonoured cheques 25,000 20,000
Outstanding balance as of 31/12/20×2 265,000 270,000

Sales Ledger Control Account for the year 01/01/20×2 to 31/12/20×2 will be presented as follows-

Sales Ledger Control A/c

The balance of SLCA ie. 535,000 is equal to the sum of the balance of individual outstanding debtors ie. 265,000 + 270,000 = 535,000.

You can see that the transactions which increase the balance of SLCA are debited & decrease the balance are credited. Also, it is depicting a debit balance.