Loan and Rent accounts

loopy louloopy lou Feels At HomePosts: 41Registered
Can anyone help in explaining the rules of what balances go where in the T accounts for these please

Comments

  • twinks01twinks01 Settling In Nicely Posts: 16Registered
    A loan is a liability on the balance sheet so should be a credit balance.

    Rent paid is an expense on the P&L so is a debit balance, and rent received is income so is the opposite side. In accounts prep 1 the rent account might be used as something that will have prepayments or accruals as well.
  • wannabebeanwannabebean Feels At Home Posts: 72Registered
    Help

    It really helps if you think of Book-Keeping T accounts as two different things.

    1. Cash entries

    2. Credit entries

    Cash entries are easy. Credit entries (i.e sales or purchases) are a bit more tricky.

    I found it helped to think of Cash transactions (or rather non-credit transactions) as having a 'Master Account' - in this case the bank account and then several children - i.e the rent account, loan account etc.

    For Credit I found it easier to work the other way - pick either the Sales Ledger Control or the Purchase Ledger Control as your master account. That way you can sort of reverse engineer the entries i.e lets pick our master account as the SLC and remember the following:

    DR
    CR
    Opening Balance b/f Sales Returns
    Credit Sales (from Sales Day Book)
    Discounts Allowed
    Bad Debts
    Closing balance c/d



    Then when doing PLC - everything is simply the opposite - and you would have Discounts Received instead or Allowed.

    For balancing accounts just think of the C/D amount being the amount that will appear on the side with the smallest balance and is the amount needed to balance both sides of the T account. The B/D will naturally appear on the other side of the T account compared to the C/D amount.
  • wannabebeanwannabebean Feels At Home Posts: 72Registered
    Hi

    The reply lost it's formatting - should read

    Dr
    Opening Balance b/f Sales Returns
    Credit Sales (from Sales Day Book)

    Cr

    Discounts Allowed
    Bad Debts
    Closing balance c/d
  • piratepirate Trusted Regular Posts: 469Registered
    I remember usiing DEAD and CLIC

    Anything falling under the DEAD set is a debit
    anything falling under the CLIC is a credit

    D = Debtors
    E = Expenses
    A = Assets
    D = Drawings

    C = Creditors
    L = Liabiliies
    I = Income
    C = Capital
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