B2: 3.03 The Sales Ledger Control Account

The Sales Ledger Control Account (often abbreviated to “SLCA”) is a ledger account found in a business’ General Ledger. It records transactions that affect the amount of money owed to the business by its credit customers and enables us to calculate the total amount owed by customers.

Those transactions that increase the amount owed are recorded on the debit side of the SLCA and those that reduce the amount owed are recorded on the credit side of the SLCA. In the Bookkeeping Part 1 course we saw how information from the day books and cash books are posted to this account and an example of a SLCA is given below.

In addition to sales on credit, sales returns, discounts allowed for prompt payments and cash/bank receipts from credit customers there can be other transactions that would appear in the SLCA. These would be recorded using a journal and then posted to the SLCA.

Three such transactions that are commonly included in exam questions are:

  • Irrecoverable debts
  • Interest charged to customers for late payment
  • Contra set-offs

We looked at how irrecoverable debts are recorded in section 1 of this course. How we deal with the other two transactions is described below.

Interest charged to customers for late payment

If a customer doesn’t pay on time, many businesses will charge them interest which will be added onto the amount owed by the customer. The interest would be debited in the SLCA (as it is increasing the amount owed to the business) and credited to an Interest Charged (or Receivable) on Late Payment account. It would also be debited to the customers account in the Sales Ledger.


Ram Ltd has a customer, Shepherd Ltd, that is now sixty days overdue in paying the £10,000 it owes. Ram Ltd’s accountant has calculated that £140 interest should be charged to Shepherd Ltd.

The journal to record this charge in the General Ledger is as follows:

The above journal would be posted to the General Ledger accounts as follows:

The interest would also be recorded in Shepherd Ltd’s customer account in the Sales Ledger.

Contra set-offs

A contra set-off (also known as a contra), is a transaction that can occur when a business both buys and sells goods or services with another business on credit terms. Where this happens both businesses will owe money to the other and might therefore agree to net some of these debts off to leave a single balance outstanding.


Tristan Ltd is a business that buys goods from, and sells goods to, Isolde Ltd on credit terms. On 1st June, Tristan Ltd is owed £4,000 from Isolde Ltd and also owes £3,000 to Isolde Ltd. Whilst both businesses could just pay the amount they owe, their managers agree to contra £3,000 to simply their liabilities. After the contra is recorded both amounts will be reduced so that Tristan Ltd will be owed £1,000 from Isolde Ltd but will not owe Isolde Ltd anything.

Recording a contra set-off

A contra set-off will have the effect of reducing the amount the business is owed by its customers and reducing the amount it owes its suppliers. As such, the contra amount will be debited to the Purchases Ledger Control Account and credited to the Sales Ledger Control Account. We will also record the contra in the other business’ ledger accounts in the Purchases Ledger and the Sales Ledger.

Illustration (continued)

In order to record the contra set-off of £3,000, Tristan Ltd’s bookkeeper will record the following journal

Purchases Ledger Control£3,000
Sales Ledger Control£3,000
Journal to record a contra set-off of £3,000 with Isolde Ltd

The above journal would be posted into the General Ledger accounts as follows:

The entries in the subsidiary ledgers would be:

Sales Ledger Control account

A further example of a sales ledger control account, this time including the types of transactions mentioned above (shown in blue) is given below.