Level 2 Exam ?Urgent help needed!!

Treena91

I have my first exam on thursday and I have completely confused myself doing my revision and mock exams. For example, one of the questions were to transfer the entries in a sales day book to the sales ledger. I thought that they would be credits as the sales ledger stands for income in the DEAD or CLIC thing but they were debits on here. Then showing the postings to the general legder its saying that sales is a debit (I thought should be credit as income), VAT as a credit I thought it should be a debit (as its money to be reclaimed from HMRC) and the SLCA is a credit (I thought should be a debit as it is an asset)!!!

Does anyone have any lists that just show all the transfers and postings and whether they should be credit or debit? Also was I wrong or right??

Sorry for sill questions!! Please help ASAP

Treena

SashaDella

For confusion with Debits and Credits the only way I could remember was using the "bank"

Debits is money into the bank
Credits are money out of the bank

Sales = Money in bank (db), Money out Sales (cr)

So £50 Sales + £10 VAT

Sales Ledger (The customer acc) - £60 Db (when paid money in bank, this would then be credited off)

Sales Ledger Control Acc - £60 Db (always same as sales ledger account)
Sales - £50 Cr
VAT - £10 Cr

I'm pretty sure thats right ^

SashaDella

I think the DEAD CLIC thing only works for the general ledgers

Treena91

So the sales ledger and the purchases ledger always does the same as the SLC and the PLC??
what about the sales and purchases in the general ledger because they seem to do the opposite, which one of those does the VAT follow. I'm finding this really hard to get through my head especially since the question about I mentioned "Then showing the postings to the general legder its saying that sales is a debit (I thought should be credit as income), VAT as a credit I thought it should be a debit (as its money to be reclaimed from HMRC) and the SLCA is a credit (I thought should be a debit as it is an asset)!!!"
It just completely threw me, is that one right or wrong?

Thanks for your reply :001_smile:

johnnyboy987

I think you're getting confused between SALES and SALES LEDGER. The Sales Ledger is a list of debtors (ie. People who owe you money). This is an Asset, and therefore a Debit. Sales is Income and is therefore the credit... Hope that helps

SashaDella

Whats the question say?

Treena91

Thank you, that makes more sense now, and the fact that the DEAD CLIC thing only applies to the general ledger as well I forgot about that! So if I transferred the SDB to the Genral ledger, then the enteries would be:
Sales: (Credit=income)
VAT: (Credit=liability)
SLC: (Debit=Asset)??

Thank you for your reply

SashaDella

Yes thats correct!

The balance of the SLC and Sales and VAT is also zero. Then you know that the double entry is complete

Treena91

It is the transfer of a SDB with invoices to the general ledger but it goes as follows:

It shows the postings to the general legder from the SDB saying that sales is a debit (I thought should be credit as income), VAT as a credit I thought it should be a debit (as its money to be reclaimed from HMRC) and the SLCA is a credit (I thought should be a debit as it is an asset)!!! :S

SashaDella

Are you sure its not sale return day book?
What book is it?

so the book says:
Sales = Db
VAT = Cr
SLCA = Cr

That doesn't balance though? or make sense haha

Treena91

I know it has really confused me!

To sum up to the transfers to the general ledger then:

from SDB:
Sales (credit - income)
VAT (credit - liabilty)??
SLC (debit - asset)

from SRDB:
Sales returns (debit - reverse of income)
VAT ( debit - reverse of money owed)??
SLC (credit - decrease in asset)

from PDB:
Purchases ( debit - expense)
VAT ( debit - money gained from HMRC)??
PLC ( credit - liability)

from PRDB
Purchases returns (credit - decrease in expense)
VAT ( credit - decrease money gained from HMRC)??
PLC ( Debit - Decrease in Liabilty)

(I am a bit confused by the VAT postings)

Thanks again so much for your help! I need to get this in my head or written down so I can remember it!!

SashaDella

Yeah thats it, but don't worry so much about the debits and credits thing! It wont take long for you to remember.

It may help you to study the trial balance postings... thats how I learn fastest!

Remember the Sales/Purchases and VAT are always the same Cr/Db because they make up the gross amount owed/owing.

The control accounts is just the total amount owed/owing.

You seem to have the hang of it!

Treena91

Thanks so much Sasha:001_smile: you have really helped me!

liveprincess

Hi Treena

hope this doesn't confuse you but DEAD and CLIC also applies to subsidiary ledgers: when you make credit sale you post it to the customers ledger account as debit, because it's an asset - he owes you money. Similar when you make a credit purchase it's a credit in supplier account - because it's a liability. Good luck with your exam. When are you taking it?