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Double Entry Bookkeeping

MMohammed9y ago
Hi John, the following transactions are as below: Sandy Hampton has the following transactions for her company in June: 4 June Sells £6,000 goods on credit to R. Fish. £4,500 goods on credit to R. Leake. £3,500 goods for cash to R. Shah 11 June R. Shah buys on credit £2,000 of goods from Sandy Hampton. 15 June Sandy Hampton receives bank interest of £25 for the 4th of June for the two first transactions we don't have cash account involve here, however we have accounts receivables (Assets created through business), inventory and sales a/c. with amount of £(6000,4500). my question here about inventory( it goes down and will goes with Credit) we need to combine into Journal entry as below: account receivables £6000 Sales £6000 Cost of Goods sold £6000 Inventory £6000 is that correct recordings? for the 11 June Accounts receivables £2000 sales £2000 what about Inventory here is it involve in this transaction?
John MoffatJohn MoffatTutor9y ago#1
When you sell goods on credit, the double entry is Dr Receivables Cr Sales When you buy goods on credit, the double entry is Dr Purchases Cr Payables. We only make an entry for inventory at the end of the period. All of this is covered (with examples) in my lectures on double entry bookkeeping and on Inventory.
MMohammed9y ago#2
Hi John, But on 11 June R. Shah buys on credit £2,000 of goods from Sandy Hampton, and we are talking here about Sandy not R. Shah. Is that account should be (Asset: account receivables) instead of Purchases? another question: when you purchase goods on credit/ cash, is the account involve here is: Assets a/c :Inventory purchases? thanks for help, your lectures completely helpful. Regards, Mohammed
John MoffatJohn MoffatTutor9y ago#3
As I wrote before, when you sell goods on credit (as Sandy sold to R Shah), the entry is to Dr Receivables and Cr Sales. When you buy goods on credit, you Dr Purchases and Cr Payables. If you buy for cash, then you Dr Purchases and Cr Cash. As I explain in my lectures on Inventory, you only account for inventory and the end of the accounting period.
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