B2: 3.05 The Purchases Ledger Control Account

The Purchases Ledger Control Account (often abbreviated to “PLCA”) can be found in a business’ General Ledger. It records transactions that affect the amount of money owed by the business to its credit suppliers and is used to calculate the total amount owed to the suppliers.

Those transactions that reduce the amount owed to suppliers are recorded on the debit side of the PLCA and those that increase the amount owed are recorded on the credit side of the PLCA.

In the Bookkeeping Part 1 course we saw how the day books and cash books are posted to this account and an example of a PLCA is shown below.

As was the case with the SLCA, additional transactions can appear in the PLCA which would be recorded using a journal and then posted to the General Ledger and the relevant supplier accounts in the Purchases Ledger.

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

  • Interest charged by suppliers for late payment
  • Contra set-offs

Interest charged by suppliers for late payment

If a business doesn’t pay its suppliers on time, the business could be charged interest (in the same way a business might charge a late paying customer). This interest would be credited in the PLCA (as it is increasing the amount owed by the business) and debited to an Interest Charged (or Payable) on Late Payment account. It would also be credited to the supplier’s account in the Purchases Ledger.


Bottle Ltd has a supplier, Cask Ltd, who was not paid on time. Cask Ltd has therefore charged Bottle Ltd £20 interest for late payment.

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 above journal entries are shown in blue):

The interest would also be recorded in Cask Ltd’s supplier account in the Purchases Ledger.

Contra set-offs

As we saw when we looked at the Sales Ledger Control account, a contra set-off (or contra), occurs when two businesses that owe each other money agree to net some of these debts off to leave a single balance outstanding.

Recording a contra set-off

As detailed previously, 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. An illustration of how a contra is recorded can be seen in section 3.02 of this course.

Purchases Ledger Control account

An example of a purchases ledger control account including interest charged by suppliers for late payment and contra set-offs shown in blue, is given below.

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