Please Help! during Unit 5 confusion of Double entry!

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi everybody!
It may sound weird but during a chapter about double entry revision in Unit 5 i have been confuse about cash and credit receipt/payment!

Sometimes i see that the double entry for cash receips in the ledger is:

DR CASH
CR SALES
or

DR CASH
CR SLCA (DEBTOR).

Example: Sold products for £100 cash.

Where do you credit the amount? in SALES LEDGER or DEBTOR/SLCA? and why?

Thank you for any reply.
Manu

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Please Help! during Unit 5 confusion of Double entry!

    Cash receipts may happen as a result of a credit customer paying his/her account or as a result of direct cash sales.

    When a credit customer pays their account the entries are:

    Cr Customer a/c (Sales ledger)
    Cr SLCA
    Dr Cash

    Cash sales will be:

    Cr Sales (net)
    Cr VAT (if applicable)
    Dr Cash (gross)

    The SLCA is only ever used for entries related to credit sales. Remember, it's a summary of the entries made in the customer accounts in the sales ledger (hence the name).

    Hope this helps

    Chris
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Please Help! during Unit 5 confusion of Double entry!

    Hi Chris,thank you for your reply.
    What you wrote is what I used to know, but in this example in my book they say:

    Cash receipts from debtors:
    DR CASH Account
    CR SLCA

    So excluding VAT, if there is a cash receipt, where do you credit the amount?

    Incredible i am stuck with this topic...i'm already worried what's coming next... :?


  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Please Help! during Unit 5 confusion of Double entry!

    If it's a cash receipt from a credit customer (ie a debtor) it goes in as a credit in the SLCA (and their account in the sales ledger )and if it's a receipt from a cash sale it goes in as a credit in the sales account.

    Chris
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Please Help! during Unit 5 confusion of Double entry!

    Thank you again Chris. It's clear now :D

    Manu

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