A receivables control account is a summary account that records the totals of everything that changes what customers owe: credit sales, returns, cash received, discounts and bad debts. It appears whenever a question gives you monthly totals and asks for the amount owed by customers, or for a missing figure.
It builds on double-entry foundations and belongs to the module on control accounts.
What goes on which side?
Receivables is an asset, and customers owe the business. Anything that makes the debt bigger is a debit. Anything that makes it smaller is a credit.
| Debit side (customers owe more) | Credit side (customers owe less) |
|---|---|
| Opening balance b/d | Sales returns (credit notes) |
| Credit sales (from the sales day book) | Cash and cheques received from customers |
| Dishonoured cheques | Discount allowed |
| Interest charged on overdue accounts | Bad debts written off |
| Contra with the payables ledger |
Notice that cash sales appear nowhere. The customer paid on the spot, so the business was never owed anything.
How to build it, step by step
- Rule a two-sided account with the headings Debit and Credit.
- Enter the opening balance on the debit side.
- Enter each total from the books: sales day book total and dishonoured cheques on the debit side; returns, bank receipts, discount allowed and bad debts on the credit side.
- Total both sides, the larger side first. Work out the difference and write it as balance c/d on the smaller side so both totals agree.
- Bring the balance down on the debit side as the new opening balance.
Worked example
Bayu Hardware has the following totals for March. Prepare the receivables control account.
| Item | RM |
|---|---|
| Receivables at 1 March | 14,200 |
| Credit sales | 48,600 |
| Sales returns | 1,900 |
| Cheques received from customers | 41,300 |
| Discount allowed | 820 |
| Bad debts written off | 600 |
| Cheque from a customer dishonoured | 450 |
Debit side: 14,200 + 48,600 + 450 = RM 63,250.
Credit side before the balance: 1,900 + 41,300 + 820 + 600 = RM 44,620.
Balance c/d: 63,250 − 44,620 = RM 18,630.
| Debit | RM | Credit | RM |
|---|---|---|---|
| Balance b/d | 14,200 | Sales returns | 1,900 |
| Credit sales | 48,600 | Bank | 41,300 |
| Bank (dishonoured cheque) | 450 | Discount allowed | 820 |
| Bad debts written off | 600 | ||
| Balance c/d | 18,630 | ||
| 63,250 | 63,250 |
The check: 44,620 + 18,630 = 63,250, so both sides agree. Customers owe Bayu Hardware RM 18,630 at 31 March.
If a discount arrives as a percentage, work out the amount first. The percentage-base explorer shows the base at each step.
The mistake to watch for
A common slip is to include cash sales in the debit side because they sit in the same sales figures.
Mistaken answer: the student adds RM 7,300 of cash sales to the debit side and gets a closing balance of RM 25,930.
The cash sales never created a receivable, so the balance is overstated by RM 7,300.
The correction is to ask one question for every item: “does this change what a credit customer owes?” Cash sales fail the test and are left out. The correct closing balance stays at RM 18,630.
Check yourself
Work on paper first, then open each answer.
1. Receivables at 1 June were RM 5,000. Credit sales were RM 20,000, cash received RM 18,000 and sales returns RM 500. Find the closing balance.
Show answer
Debit side: 5,000 + 20,000 = 25,000. Credit items: 18,000 + 500 = 18,500. Balance: 25,000 − 18,500 = RM 6,500.
2. A shop makes RM 3,000 of cash sales in the month. Which side of the receivables control account does it go on?
Show answer
Neither. A cash sale creates no receivable, so it is not recorded in the control account at all.
3. Opening receivables RM 6,000, credit sales RM 30,000, bank receipts RM 27,600, discount allowed RM 400 and closing receivables RM 7,400. Find the sales returns.
Show answer
Debit side: 6,000 + 30,000 = 36,000. Credit items other than returns: 27,600 + 400 = 28,000. Closing balance: 7,400. Returns = 36,000 − 28,000 − 7,400 = RM 600. Check: 28,000 + 600 + 7,400 = 36,000.
Where this leads next
The same layout, with the sides swapped, builds the payables control account. Then test the whole topic with the control accounts practice set, and use the double-entry and ledger trainer to see the ledger entries behind each total.
Some students can build the account from a clean list but lose the sides when an unusual item appears, such as a dishonoured cheque. That is exactly the kind of pattern our teachers look for in online one-to-one Accounting tuition.