Posting Cash book receipts
fabioconte
Registered Posts: 6
Hi all
I am stuck at question bank practice example 12.
Situation;
Cash book debit side - bullseye limited £1140
Discounts allowed daybook bullseye limited Total £60, VAT £10, Net £50
Question;
What will be the two entries in the subsidiary sales ledger?
I put;
1.Bullseye limited amount £1140 and ticked debit side
2. Bullseye limited amount £60 and ticked credit side
Am i wrong? I thought subsidiary ledgers are just for intervidual customer accounts? Am I choosing the same entry twice i,e. Bullseye limited?
Second question;
What will be the four entires in in the general ledger?
I put;
1. Bank £1140 and ticked the debit side
2. Discounts allowed £50 and ticked the credit side
3. Sales Ledger Control £950 and ticked the credit side
4. VAT £10 and ticked the credit side
Obviously my debits and credit totals are not agreeing, what am I doing wrong?
Many thanks for any help.
I am stuck at question bank practice example 12.
Situation;
Cash book debit side - bullseye limited £1140
Discounts allowed daybook bullseye limited Total £60, VAT £10, Net £50
Question;
What will be the two entries in the subsidiary sales ledger?
I put;
1.Bullseye limited amount £1140 and ticked debit side
2. Bullseye limited amount £60 and ticked credit side
Am i wrong? I thought subsidiary ledgers are just for intervidual customer accounts? Am I choosing the same entry twice i,e. Bullseye limited?
Second question;
What will be the four entires in in the general ledger?
I put;
1. Bank £1140 and ticked the debit side
2. Discounts allowed £50 and ticked the credit side
3. Sales Ledger Control £950 and ticked the credit side
4. VAT £10 and ticked the credit side
Obviously my debits and credit totals are not agreeing, what am I doing wrong?
Many thanks for any help.
0
Comments
-
I'll give this a go.
Remember the debit side of the Cash Book represents receipts coming into the Bank, so could be customers paying off invoices, or other income from Cash Sales or other Supplementary income.
The Subsidary ledger is a Memorandum Ledger, so basically mirrors the Customers Account in the Sales Ledger Control Account.
Because the Customer is paying off their invoices, you need to reduce the balance on these accounts, so you would need a CREDIT entry for £1,140 in the customers Subsidary account. The other entry you identified for £60 for Discounts Allowed would be correct.
Yes, would use the same Customers Account name twice, because the question is looking from the perspectives of the customers account in the Sales Ledger Control Account
In terms of the General Ledger, you wouldn't have an entry for VAT, as a VAT element has already been added to the Customer's invoice. The Business would pay or reclaim the VAT separately through the VAT Return submitted to HMRC.
There would be a debit entry to the Bank of £1,140, to represent the money received, but there would also need to be another Debit entry to record the expense of the Discount, in the Discount Allowed Account of £60.
The other two entries would be CREDITS, and they would be to the Sales Ledger Control Account, to represent the Customer's Balance being cleared. One entry would be £1,140 to represent the payment into the bank, and the other would be for £60 to represent the Discount being offered.
Hope this helps.0 -
Thank you! That's great appreciate it0
-
Hi, I believe I may have made a slight mistake on the General Ledger accounts, when I reread my notes last night.
I believe that you would account for the VAT in the General Ledger, as you are reducing the Businesses VAT liability by issuing a Credit Note to the Customer. This would be a DEBIT entry though rather than a CREDIT entry in the General Ledger and this would be the £10 you mentioned before.
The Discount Allowed Entry would be a DEBIT entry in the General Ledger and this would be for the Net amount of £50
The two other entries that I mentioned in the Sales Ledger Control Account, I believe would be correct.
You wouldn't have to post an entry in the General Ledger for Bank, as I presume that the Cash Book would be integrated, so it would do the relevant ledger posting for Cash and Bank automatically in the General Ledger.
I'm very sorry for the incorrect information.0 -
Hi there not a problem at all. Thanks for clarying again i am on the same page as you there.
Many thanks for your effort to have another look.
All th best0
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