There would not need to be. It is rather unlikely that a supplier would owe us money, but if they did we would either ask them to pay it or pay them less when we next bought goods from them.
I decided to make a book of prime entry for the first example. Although I did eventually get the same figures I recognize the confusion that may take place. a)How are: -Sales Returns -Purchases Returns -Irrecovorable Debt -Contra Settlement Meant to appear in the book of prime entry?
For sales returns and purchase returns there will be a sales returns book and a purchase returns book (which will operate in the same sort of way as the purchase/payables day book and the sales/receivables day book.
Irrecoverable debts and contras will be dealt with individually in the same way as explained in earlier lectures.
Sir, is sales ledger control account and receivable control account the same thing? If not, then in example 1 it is a cash sale $92700, then Debit cash 92700 Credit Sales 92700, should we also enter in on the receivable control a/c? Because you said only if it is a cash received from credit customer we enter it by Debit cash Credit receivables. But it seems to me that no matter which way it is, it always will be entered into the sales/receivable control account based on the assumption that these two are the same things? Super confused?
When we receive money from a customer then we debit cash and credit receivables. If we then give them the money back (maybe because they paid us too much) then we credit cash and debit receivables.
Thanks for the lecture.But my doubt still stays regarding the receivables, if we debit receivables than it will increase the amount of receivables.But that’s not the case right.
Please correct me if I am wrong,instead it should be debited to the sales return account and credit to cash/sales depending if it was a cash sale it credit sale.
Suppose I sell you goods for $100. I will debit receivables with $100. Suppose by mistake you pay me $200 instead of the $100 you owe me. I debit cash and credit receivables with $200. I then have a credit balance of $100 – I owe $100 back to you.
So I refund (repay) the extra cash you paid. I credit cash and debit receivables. The balance on receivables is then zero which is correct.
Allowance for Receivable would not be entered into the Receivables control ac because it is the total that would be posted into the SOFP as current asset and Allowance for Receivable is a year end adjustment which would be recorded separately on the SOFP. Sir please correct me if im wrong.
I also have a question.. why aren’t discount allowed recorded in the Receivable Control A/C? Is it recorded in the cash receipt book?
hi Sir just one question in Receivable Ledger Control A/C you have put the value of Cash received $92,700 instead of $91,270 and there is no entry for Discount Allowed of $1,430 may i kindly know how? as far as i am getting it that you put one value of $92,700 for both the entries combined as it is the sum of it .. so can we do it like that too. Thank you
What would happen if there was a contra whereby the supplier owed us instead of us owing them?
There would not need to be. It is rather unlikely that a supplier would owe us money, but if they did we would either ask them to pay it or pay them less when we next bought goods from them.
I decided to make a book of prime entry for the first example. Although I did eventually get the same figures I recognize the confusion that may take place.
a)How are:
-Sales Returns
-Purchases Returns
-Irrecovorable Debt
-Contra Settlement
Meant to appear in the book of prime entry?
For sales returns and purchase returns there will be a sales returns book and a purchase returns book (which will operate in the same sort of way as the purchase/payables day book and the sales/receivables day book.
Irrecoverable debts and contras will be dealt with individually in the same way as explained in earlier lectures.
very important lecture, this topic always confuses me!!
thanks for the great material,
Paul
Thank you for your comment 馃檪
Important lecture. Thankyou !
Sir, is sales ledger control account and receivable control account the same thing? If not, then in example 1 it is a cash sale $92700, then Debit cash 92700 Credit Sales 92700, should we also enter in on the receivable control a/c?
Because you said only if it is a cash received from credit customer we enter it by Debit cash Credit receivables. But it seems to me that no matter which way it is, it always will be entered into the sales/receivable control account based on the assumption that these two are the same things? Super confused?
The sales ledger control and the receivables ledger control are different names for the same thing.
However it is not the same as the sales account.
If we make a cash sale, we debit cash (because we have received cash) and credit sales (because we have made sales).
If we make a sale on credit, we debit receivables (because we are owed money) and credit sales (because we have made sales).
Have you watched all the earlier lectures, because I explain these entries in my lectures on Chapter 3 of our free lecture notes.
Sorry i did not understand part of refund to customers. If we refund money to somebody we give it back why debit receivable
When we receive money from a customer then we debit cash and credit receivables.
If we then give them the money back (maybe because they paid us too much) then we credit cash and debit receivables.
Thanks for the lecture.But my doubt still stays regarding the receivables, if we debit receivables than it will increase the amount of receivables.But that’s not the case right.
Please correct me if I am wrong,instead it should be debited to the sales return account and credit to cash/sales depending if it was a cash sale it credit sale.
Refunds are not returns!
Suppose I sell you goods for $100. I will debit receivables with $100.
Suppose by mistake you pay me $200 instead of the $100 you owe me. I debit cash and credit receivables with $200.
I then have a credit balance of $100 – I owe $100 back to you.
So I refund (repay) the extra cash you paid. I credit cash and debit receivables. The balance on receivables is then zero which is correct.
what of allowance for receivables to they affect the receivable ledger control account?
No – it does not affect the receivables account at all.
I do explain all about this in my lectures on Irrecoverable and Doubtful Debts.
Allowance for Receivable would not be entered into the Receivables control ac because it is the total that would be posted into the SOFP as current asset and Allowance for Receivable is a year end adjustment which would be recorded separately on the SOFP. Sir please correct me if im wrong.
I also have a question.. why aren’t discount allowed recorded in the Receivable Control A/C? Is it recorded in the cash receipt book?
hi Sir just one question in Receivable Ledger Control A/C you have put the value of Cash received $92,700 instead of $91,270 and there is no entry for Discount Allowed of $1,430 may i kindly know how?
as far as i am getting it that you put one value of $92,700 for both the entries combined as it is the sum of it .. so can we do it like that too.
Thank you