When a business has lost its sales and purchases records, you can still rebuild those totals. Put the known balances and cash movements in a control account, and the missing figure balances it.
This lesson follows the statement of affairs method inside incomplete records. The layout is the same as in preparing receivables and payables control accounts.
How do you find credit sales from a receivables account?
Start with what customers owed at the beginning. Add credit sales, which is the unknown.
Take away what they paid. What remains is what they owe at the end. Rearranged: credit sales equal closing receivables plus cash received minus opening receivables.
Worked example: Encik Faizal’s bookshop
This is a worked example. Two sets of figures are known:
| Item | RM |
|---|---|
| Receivables, 1 January | 3 500 |
| Receivables, 31 December | 4 200 |
| Cash received from receivables | 38 400 |
| Cash sales | 12 000 |
| Payables, 1 January | 4 000 |
| Payables, 31 December | 3 200 |
| Paid to suppliers | 27 000 |
Step 1: credit sales. Receivables control account, debit side: opening 3 500 plus credit sales (unknown). Credit side: cash received 38 400 plus closing 4 200, which is 42 600. The debit side must equal 42 600, so credit sales are 42 600 − 3 500 = RM39 100.
Step 2: total sales. Add cash sales: 39 100 + 12 000 = RM51 100.
Step 3: credit purchases. Payables control account, credit side: opening 4 000 plus credit purchases (unknown). Debit side: payments 27 000 plus closing 3 200, which is 30 200. Credit purchases are 30 200 − 4 000 = RM26 200.
The two control accounts use the same shape, but the sides flip. In receivables the unknown is on the debit side. In payables the unknown is on the credit side.
The mistake that flips the answer
A student treats the opening balance as something to add and the closing balance as something to subtract. The working is short and looks plausible.
| Line | Wrong | Right |
|---|---|---|
| Working | 38 400 + 3 500 − 4 200 | 38 400 + 4 200 − 3 500 |
| Credit sales | RM37 700 | RM39 100 |
The wrong answer is RM1 400 too low, which is twice the RM700 rise in receivables. Customers owed more at the end, so sales must have exceeded receipts. Draw the account and put each figure on its side, even if the drawing is rough.
Check yourself
Receivables were RM5 000 at the start and RM6 500 at the end. Customers paid RM42 000.
Payables were RM6 000 at the start and RM4 500 at the end. RM30 000 was paid to suppliers. Find credit sales and credit purchases.
Answer
Credit sales: 6 500 + 42 000 − 5 000 = RM43 500.
Credit purchases: 4 500 + 30 000 − 6 000 = RM28 500.
Check the first one: 5 000 + 43 500 − 42 000 = 6 500. It matches the closing balance.
What to study next
Cash and bank are often missing too. Continue with finding missing cash and bank figures, then see the whole chapter together in the incomplete records practice set.
If you want a teacher to rebuild control accounts with you, see online one-to-one Accounting tuition.