A payables control account summarises the totals that change what the business owes its credit suppliers: credit purchases, purchase returns, payments and discounts. You meet it in questions that give monthly totals and ask for the amount owed to suppliers, or for one missing figure.
It mirrors the receivables control account and belongs to the module on control accounts.
What goes on which side?
Payables is a liability, and the business owes the money. Anything that makes the debt bigger is a credit. Anything that makes it smaller is a debit.
| Debit side (owe less) | Credit side (owe more) |
|---|---|
| Purchase returns (credit notes received) | Opening balance b/d |
| Payments to suppliers | Credit purchases (from the purchases day book) |
| Discount received | |
| Contra with the receivables ledger | |
| Closing balance c/d |
The balance is carried down on the debit side and brought down on the credit side.
How to build it, step by step
- Rule a two-sided account.
- Enter the opening balance on the credit side.
- Enter credit purchases on the credit side, and returns, payments and discount received on the debit side.
- Total each side and find the difference. Write it as balance c/d on the smaller side, which is the debit side here.
- Bring the balance down on the credit side.
Worked example
Delima Cafe has these totals for May. Prepare the payables control account.
| Item | RM |
|---|---|
| Payables at 1 May | 9,800 |
| Credit purchases | 31,500 |
| Purchase returns | 1,200 |
| Payments to suppliers by cheque | 27,400 |
| Discount received | 540 |
Credit side: 9,800 + 31,500 = RM 41,300.
Debit side before the balance: 1,200 + 27,400 + 540 = RM 29,140.
Balance c/d: 41,300 − 29,140 = RM 12,160.
| Debit | RM | Credit | RM |
|---|---|---|---|
| Purchase returns | 1,200 | Balance b/d | 9,800 |
| Bank | 27,400 | Credit purchases | 31,500 |
| Discount received | 540 | ||
| Balance c/d | 12,160 | ||
| 41,300 | 41,300 |
The check: 29,140 + 12,160 = 41,300. Delima Cafe owes its suppliers RM 12,160 at 31 May.
The mistake to watch for
A common slip is to include cash purchases because they appear in the same purchases total.
Mistaken answer: the student adds RM 4,100 of cash purchases to the credit side and gets a closing balance of RM 16,260.
No supplier is owed anything for a cash purchase, so the balance is overstated by RM 4,100.
The correction is to ask: “does this change what a credit supplier is owed?” Cash purchases fail the test. The correct closing balance stays at RM 12,160.
Check yourself
Work on paper first, then open each answer.
1. Payables at 1 July were RM 7,000. Credit purchases were RM 24,000, payments RM 22,500 and purchase returns RM 800. Find the closing balance.
Show answer
Credit side: 7,000 + 24,000 = 31,000. Debit items: 22,500 + 800 = 23,300. Balance: 31,000 − 23,300 = RM 7,700.
2. On which side does discount received go, and why?
Show answer
The debit side. It reduces the amount owed to suppliers, and a reduction in a liability is a debit.
3. Opening payables RM 6,500, payments RM 18,000, discount received RM 300, purchase returns RM 700 and closing payables RM 9,100. Find the credit purchases.
Show answer
Debit side: 18,000 + 300 + 700 + 9,100 = 28,100. Credit side must equal this: 6,500 + purchases = 28,100, so purchases = RM 21,600. Check: 6,500 + 21,600 = 28,100.
Where this leads next
Next, see why the total in this account is not the same thing as any one supplier’s balance in individual balances and control totals. Then test yourself with the control accounts practice set, and use the double-entry and ledger trainer to follow the ledger entries.
If you can do the receivables version but the payables version still flips on you, our teachers can find the reason in online one-to-one Accounting tuition.