How to Create Control Account for Accounts Receivable and Link Customer Subsidiary Accounts

Overview:

A general ledger (GL) control account for Accounts Receivable (AR) consolidates individual customer balances from subsidiary ledgers into one summarized account. This provides a streamlined view of total receivables while maintaining detailed records at the subsidiary level. By linking customer accounts to the control account, businesses maintain organized and accurate financial records, streamlining reporting and reconciliation.

This article provides a step-by-step guide on how to create the Accounts Receivable control account in the Chart of Accounts and link it to customer subsidiary accounts.

Scenario:

A company wants to establish a dedicated control account for Accounts Receivable in its Chart of Accounts. This will aggregate customer balances while allowing detailed customer-level tracking through linked subsidiary accounts.

Procedure:

Step 1: Create the Accounts Receivable Control Account

• Navigate to General Ledger > Chart of Accounts.

• Click on New.

• Choose Current Assets account type as the Parent.

• Enter the following details:

  • Account Code: Assign a unique number (e.g., 103-0000)

  • Account Name: Accounts Receivable (or a custom name if preferred)

• Select Debtors Control Account as the Special Account Type.

• Save the new account.

Step 2: Link Customer Accounts to the Control Account

• Navigate to Account Receivable > Customers.

• Review existing customer records to ensure each customer account is classified under the appropriate accounts receivable Control Acc., based on your company’s accounting structure. 

• If adding new customer account, assign them to the appropriate accounts receivable Control Acc. during the setup.

Application:

• When invoices are created for linked customers, the system will automatically post amounts to the Accounts Receivable control account.
  

• Payments made by customers will reduce the balance in the control account.
  
  

• The Accounts Receivable control account will appear on the balance sheet, reflecting total customer balances.
  
  

• Subsidiary accounts provide detailed records of customer interactions and outstanding invoices.

• Periodically reconcile the total in the control account with the sum of individual customer balances to ensure accuracy.