Another cash book question...
System
Posts: 100,534 🤖 Admin 🤖
Hi everyone,
I've read through many of the cash book questions that have been posted previously, but couldn't find my question anywhere! I have just learned how to post receipts to a cash book. Most of the examples we did in class involved a columns for VAT, cash, and bank. Cheques received for credit sales went into the bank column, and cash received for cash sales was split between the VAT column and the cash column.
In my homework, though, there is a question where a cheque is received for cash sales (for example let's say the cheque was for £117.50). Obviously the cheque will have to be paid in to the bank, so does the whole £117.50 go in the bank column? I know I need to account for the VAT, but if I put £17.50 in the VAT column, then I feel I should only put £100 in the bank column--won't this then throw my bank reconciliation out of whack? (I'm assuming the cash book is used when doing the bank rec, but we haven't got to that point in the course yet). Or does the £100 go into the cash column because it's cash sales (even though it was paid by cheque)? My book doesn't explain these things and my teacher is hopeless. If anyone can help me I'd really really appreciate it.
I've read through many of the cash book questions that have been posted previously, but couldn't find my question anywhere! I have just learned how to post receipts to a cash book. Most of the examples we did in class involved a columns for VAT, cash, and bank. Cheques received for credit sales went into the bank column, and cash received for cash sales was split between the VAT column and the cash column.
In my homework, though, there is a question where a cheque is received for cash sales (for example let's say the cheque was for £117.50). Obviously the cheque will have to be paid in to the bank, so does the whole £117.50 go in the bank column? I know I need to account for the VAT, but if I put £17.50 in the VAT column, then I feel I should only put £100 in the bank column--won't this then throw my bank reconciliation out of whack? (I'm assuming the cash book is used when doing the bank rec, but we haven't got to that point in the course yet). Or does the £100 go into the cash column because it's cash sales (even though it was paid by cheque)? My book doesn't explain these things and my teacher is hopeless. If anyone can help me I'd really really appreciate it.
0
Comments
-
Re:Another cash book question...
You need to enter the whole 117.50 in the bank column as that's what you've actually paid into the bank. And, yes, you will be using the cash book for doing bank recs at some point down the line.
The figures for cash/cheques entered into the Cash Book are part of the double entry system and must have corresponding entries. The VAT column is just there so you know what part of the money paid in is to be placed in the VAT account - it's not really part of the double entry. The double entry for a cash sale of 117.50 (inc VAT) will be
Dr Bank/CB Receipts 117.50
Cr VAT 17.50
Cr Sales 100
When you come to look at the 'analysed cash book' it will most likely have a column for Sales which should make things clearer.
I think you need a better book, presumably a better teacher is not an option
Hope that helps
Chris0 -
Re:Another cash book question...
Thank you for explaining that, CJC, it makes a lot more sense now! We have been working with analysed cash books in class, but they didn't have separate columns for bank & cash (just one "total" coloumn). And the examples in my textbook have only a bank column, so when both bank & cash appeared in the homework I didn't know what to do!
Thank you very much for setting me straight.
0 -
Re:Another cash book question...
You're welcome. I well remember how confusing things like that can be when you're starting out.
Chris0