Cashbook Confusion, Posts to Control Acc

SashaDellaSashaDella Trusted RegularPosts: 362Registered
Hello! I have been studying for a couple of weeks, and I (think I) understand basics of posting Sales and Purchases (recording the invoice part). I used this system to help me.

Sales/Purchase Returns: Db - Cust Acc and Control Acc. Cr - Sales/Purchase Returns/VAT

Purchases/Sales Returns: Cr - Cust Acc and Control Acc. Dc - Purchases/Sales Returns/VAT

Now I come to the cashbook and recording payments.

Cash receipts you : Cr all these accounts?! Which control account do you use? as if you Cr SCLA and then Cr again this would not balance?!

and vice versa for purchase payments..

I hope you understand my confusion/question

Thank you

Comments

  • crispycrispy Trusted Regular SouthamptonPosts: 454Registered
    Hello,

    Im may be reading your q wrong, but remember that the Customer/Supllier indivdual accounts in the Sales/Purchase ledger do not in themselves form part of the main double entry system. Therefore when entering a receipt, you are not Cr twice - you enter Dr Bank/Cashbook and Cr SLCA - the customer individual are also updated, but this entry is not part of the main (nominal) ledger which makes up towards your trial balance.

    This is also the reason that at Month/Year End you would perform a reconciliation between your SLCA balance, and Sales Ledger balance - to check for any posting errors and prove out your SLCA balance.

    One other item to remember, the cashbook can sometimes form part of the double entry system - in which case when posting a receipt there would be no Dr to Bank as you have already effective entered the Dr figure to the cashbook.
  • Clintm15Clintm15 Well-Known FarehamPosts: 247Registered
    The individual customer/supplier accounts are part of a 'subsidiary' ledger. This means they are used as a reference to see the amount that each customer is owed or supplier is due. However, they do not form part of the double entry system. The control accounts show the individual supplier/customer accounts in total and are therefore much more appropriate to use in the double entry system. When the balance sheet is drafted it is the total amount of the debtors or creditors that is used and these will be taken from the control accounts.

    Hope this helps.
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  • SashaDellaSashaDella Trusted Regular Posts: 362Registered
    Hey thanks for your replies. I think where I was getting confused was that when a debtor pays money it goes into the cashbook and has to be posted into all the ledgers. But a CASH purchase only gets posted into the control account?
    So part of the cashbook payments go into all ledgers and part of the cashbook payments are posted into the other part of the ledger to "pay off" the invoice...

    I think I need to go back and read this over a few times! its really given me a headache haha
  • Clintm15Clintm15 Well-Known FarehamPosts: 247Registered
    SashaDella wrote: »
    Hey thanks for your replies. I think where I was getting confused was that when a debtor pays money it goes into the cashbook and has to be posted into all the ledgers. But a CASH purchase only gets posted into the control account?
    So part of the cashbook payments go into all ledgers and part of the cashbook payments are posted into the other part of the ledger to "pay off" the invoice...

    I think I need to go back and read this over a few times! its really given me a headache haha


    It's important not to let the term 'cash' confuse you. As a cash transaction can involve a cheque and this will use the bank account and not the cash account. A cash account should be thought of like a shop till, whereas a 'cash transaction' is in contrast to a 'credit transaction'. When you purchase items from a shop with your debit card you are involved in a cash transaction but your 'bank account' will be credited and the shop's will be debited.


    A cash purchase would be...

    Credit - Cash Account (or Bank Account)
    Debit - Purchases

    A cash sale....

    Credit - Sales
    Debit - Cash Account (or Bank Account)

    A credit purchase would be...

    Credit - Purchase Ledger Control Account
    Debit - Purchases

    A credit sale....

    Credit - Sales
    Debit - Sales Ledger Control Account


    When a debtor (customer) pays it would be..

    Credit - Sales Ledger Control Account
    Debit - Bank Account

    When you pay a supplier it is....

    Credit - Bank Account
    Debit - Purchase Ledger Control Account
    AAT
    Level 2 - 2011
    Level 3 - 2012
    Level 4 - 2013

    ACCA
    F4 - Corporate Law - Dec 2015 (passed)
    F5 - Performance Management - Dec 2014 (passed)
    F6 - Taxation - Dec 2013 (passed)
    F7 - Financial Reporting - Jun 2014 (passed)
    F8 - Audit & Assurance - Dec 2015 (passed)
    F9 - Financial Management - Jun 2015 (passed)
  • SashaDellaSashaDella Trusted Regular Posts: 362Registered
    Although in the instance of the cashbook. The cashbook would ACT as the bank / cash account?

    Because its part of the double entry, So when you pay for an expense you only debit that expense account (eg Motor Vehicles).

    But when a non credit customer pays by cash (debit card, cash, cheque etc) Where would you debit in the Main Ledger?

    So if you debit bank in ML why don't you do this when you recieve a credit customers payment - as its still money into the bank. Or is the ML SCLA and ML Bank accounts added up to make up the actual bank?

    Thanks for your help, sorry im making it more and more complicated !
  • Clintm15Clintm15 Well-Known FarehamPosts: 247Registered
    The cashbook contains the cash account and the bank account. They are side by side in the same book and they are part of the double entry system.

    Paying off an expense...

    Debit - Expense Account
    Credit - Cashbook (Bank a/c or cash a/c)

    Non credit customer paying by cash...

    Debit - Cashbook (Bank a/c if cheque, Cash a/c if physical cash)
    Credit - Sales

    The answer to your last question was in my last post....

    When a debtor (customer) pays it would be..

    Credit - Sales Ledger Control Account
    Debit - Bank Account

    When you pay a supplier it is....

    Credit - Bank Account
    Debit - Purchase Ledger Control Account
    AAT
    Level 2 - 2011
    Level 3 - 2012
    Level 4 - 2013

    ACCA
    F4 - Corporate Law - Dec 2015 (passed)
    F5 - Performance Management - Dec 2014 (passed)
    F6 - Taxation - Dec 2013 (passed)
    F7 - Financial Reporting - Jun 2014 (passed)
    F8 - Audit & Assurance - Dec 2015 (passed)
    F9 - Financial Management - Jun 2015 (passed)
  • SashaDellaSashaDella Trusted Regular Posts: 362Registered
    The reason your answers arent clear as Im not posting into the cashbook/bank account. Im only posting into the ledgers. So all the bank credits/debits have already been made.

    I understand now though thanks
  • Clintm15Clintm15 Well-Known FarehamPosts: 247Registered
    SashaDella wrote: »
    The reason your answers arent clear as Im not posting into the cashbook/bank account. Im only posting into the ledgers. So all the bank credits/debits have already been made.

    I understand now though thanks

    All of the entries I showed you were ledger entries. I don't understand what you mean.
    AAT
    Level 2 - 2011
    Level 3 - 2012
    Level 4 - 2013

    ACCA
    F4 - Corporate Law - Dec 2015 (passed)
    F5 - Performance Management - Dec 2014 (passed)
    F6 - Taxation - Dec 2013 (passed)
    F7 - Financial Reporting - Jun 2014 (passed)
    F8 - Audit & Assurance - Dec 2015 (passed)
    F9 - Financial Management - Jun 2015 (passed)
  • SashaDellaSashaDella Trusted Regular Posts: 362Registered
    But I don't "post" into the bank because I'm using cashbook entries that are already in the book to post into the ledger. I'm not posting myself into the cashbook, i'm not yet on to that stage.
    Don't worry.. thanks for trying to help anyways!

    I'll get my tutor to help me
  • Clintm15Clintm15 Well-Known FarehamPosts: 247Registered
    The cashbook is the bank account and the cash account combined. It is part of the double entry system. The two accounts are just laid out side by side.
    AAT
    Level 2 - 2011
    Level 3 - 2012
    Level 4 - 2013

    ACCA
    F4 - Corporate Law - Dec 2015 (passed)
    F5 - Performance Management - Dec 2014 (passed)
    F6 - Taxation - Dec 2013 (passed)
    F7 - Financial Reporting - Jun 2014 (passed)
    F8 - Audit & Assurance - Dec 2015 (passed)
    F9 - Financial Management - Jun 2015 (passed)
  • SashaDellaSashaDella Trusted Regular Posts: 362Registered
    yes thanks
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