Cash account

System · October 2003

Hi All I'm resitting MFR in Dec and have been going through incomplete records. I'm a bit confused as to when I'm supposed to complete a cash account. What's its purpose? I'm trying to answer a question whereby I need to find my Purchases. I don't have any opening creditors (but do have closing creditors), but apart from that all other purchases were bought cash! Hope that makes sense! Can anyone help please? Clare

System · October 2003

Cash account

Hi Do you have any other figures such as total purchases for the period or any other figures for the exercise? Neil

System · October 2003

Cash account

Hi Total purchs for year Ã‚Â£18450.00 Closing creditors Ã‚Â£1400.00 Cash spent on purchs Ã‚Â£3800.00 All sales are cash. Cash banked for year Ã‚Â£27000.00. Thanks Clare

System · October 2003

Cash account

Hi You say youre trying to find your purchases, yeat you also state that total purchases are Ã‚Â£18450.00? Is a particular type of purchae you're trying to find? Neil

System · October 2003

Cash account

Im sorry but you have confused me with the figures you have given and what figures you are trying to calculate, but I will try and explain what you orignally asked! The purpose of drawing up the bank/cash accounts is so that you have the final closing figures for your extended trial balance. These will be needed so that your trial balance works out right, and if you have got as far as drawing up the balance sheet in your course to go in there too. Normally when doing incomplete records there is a few pieces of information which you need to caculate from the information given, hence the name! The main ones being to do with creditor's and debtor's. You need to know the opening and closing balances of both, the total sales/purchases, and the receipts from debtor's or payments to creditors. The principle is the same with both and I will try and explain with creditor's but you just need to apply the same to debtor's, but you say in your question the sale's are all cash so you won't need to worry in this case. If you are not given the purchases figure then to calculate it you would need to take the amount paid to creditors, less opening creditors (these would have been in the previous year purchases), and add on the closing creditors figure. This will give you the total purchases for the year, plus any that have been paid by cash. The difficult part is where you are given the purchases figure but say not given the payments to creditor's figure. In the case of this then you need to think back to algebra at school, and rearrange the formula, which would be:- Purchases - Closing Creditors + Opening Creditors = Payments to Creditors Hope I have explained it ok, and helped but if your still stuck then think you will need to post the full question so can see what information you have been given and what you need to calculate Craig

System · October 2003

Cash account

Thank you both. I think I've made a fine job of confusing myself and everyone else! To long looking at the same figures I guess. I do understand how to calc my purchases, it was the cash account I was struggling with, I'm not sure what I'm supposed to include in it. I'm I supposed to literally treat it like cash going in and out of a money tin? Cheers Clare

System · October 2003

Cash account

To answer your question simply....YES! Basically incomplete records is where the business has only kept there receipts/payment details, and you have got to draw up the cash account as it should have been done in the first place. You just need to be careful that you include any cash sales or purchases, but where the sales or purchases are on credit then you need to include receipts from debtors and not the sales figure, and payments to creditors not the purchases figure. Also if there are any dont include the accruals or prepayments because they obviously haven't been paid out yet! Hopefully you should be sorted now, you had the right idea anyway, just needed it confirming Craig

Cash account

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