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  1. avatar says

    HI Good day, I have watch your video in bookkeeping and I am still getting some problems in it for instance, MR JRK business on 1 March 2014
    1st He introduced cash of $900,000 into the business
    2nd He made credit purchases of inventory valued at $220,000
    5th Credit Sales were $500,000
    6th He paid $150,000 to purchase two vehicles for the business
    7th He rented a new office for $17,000
    8th He purchases used office furniture for $25,000
    9th He got a loan of $700,000 from the bank
    10th He paid salaries $40,000
    22nd A debtor paid $155,000
    28th He paid a creditor $110,000
    29th He repaid the bank, $170,000 of the loan be borrowed on the 9th

    *This is what I have done:
    DATE DEBIT CREDIT AMOUNT $
    1st Cash Capital $900,000.00
    2nd Purchases Payable $220,000.00
    5th A/C Receivable Sales $500,000.00
    6th A/C Payable Cash $150,000.00
    7th Rent Cash $ 17,000.00
    8th Office Furniture Cash $25,000.00
    9th Cash Loan $700,000.00
    10th A/C Payable Cash $40,000.00
    22nd Cash A/C Receivable $155,000.00
    28th A/C Payable Cash $110,000.00
    29th A/C Payables Cash $170,000.00

    I just want to know if everything is correct. If it have any corrections to be made please let me know. It would be greatly appreciated. Thanks a lot!

    • avatar says

      This is what I have done:
      DATE DEBIT CREDIT AMOUNT $
      1st Cash Capital $900,000.00
      2nd Purchases Payable $220,000.00
      5th A/C Receivable Sales $500,000.00
      6th A/C Payable Cash $150,000.00
      7th Rent Cash $ 17,000.00
      8th Office Furniture Cash $25,000.00
      9th Cash Loan $700,000.00
      10th A/C Payable Cash $40,000.00
      22nd Cash Receivable $155,000.00
      28th A/C Payable Cash $110,000.00
      29th A/C Payables Cash $170,000.00

      Sorry about that, I have send it over because it was looking a bit confusing. It was to jumble up. I have send this part over again

  2. avatar says

    Hi, I just have one question to ask you. in double entry, and the statement is:
    He repaid the bank, $170,000 of the loan be borrowed on the 9th -should I debit loan and credit cash in the double entry?

  3. avatar says

    Hi, there!
    I could only download the chapter one video ”Introduction to Accounting” since there was a link below the video.
    But, for other videos I couldn’t find any links!
    Thanks so much.

  4. Profile photo of theimaginarynumber says

    I watched this because the BPP notes made no sense but this still makes no sense. Why is everything the opposite to what I’d expect? Cash received is a debit to the cash account. Cash paid is a credit to the cash account. Buying goods is a credit to the payables account. Paying rent is a debit to the rent account. Have I suddenly moved into a parallel universe?

    • Profile photo of John Moffat says

      You do not say why you expect everything to be opposite!!! (although I can guess why :-) )

      Double entry is only a set of rules, and since the whole world has always done it the same way, it would be very confusing if we were to do it differently!!!
      Certainly crediting payables when we owe money is very logical – it explains why people often call someone we owe money to a creditor :-)

      I am guessing that what is confusing you is what your bank statement says – it seems like the bank is doing things the other way round.
      In one sense we do not care what the bank does – we are writing up our books (not the banks).

      However, the bank is doing it correctly anyway. This is explained in the later chapter and lecture (bank reconciliations), but what is happening in the bank is this: if we put money into the bank, then in the banks own books they debit their cash account because they have received cash. In their own books they credit an account for us because they owe the money to us. So…..on the bank statement they say we have a credit balance – it means they owe us money. i.e. we have money.

      But again, what we are concerned about is our own books, and in our own books we debit our cash account when we receive money, and in our own books we credit our cash account when we pay money.

    • Profile photo of John Moffat says

      The inventory account was not relevant for the examples in this chapter. Deliberately this chapter deals with the basic recording, ignoring inventory / accruals and prepayments / irrecoverable debts / depreciation. These are all covered in detail in later chapters.

      The recording of inventory is covered in the chapter on inventory (Chapter 9) in our course notes. There are lectures on this chapter also.

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