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Double Entry Bookkeeping

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FA – FIA FFA › Double Entry Bookkeeping

  • This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • October 1, 2016 at 5:33 pm #342182
    maljawhar
    Member
    • Topics: 2
    • Replies: 2
    • ☆

    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?

    October 1, 2016 at 6:39 pm #342188
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    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.

    October 1, 2016 at 9:09 pm #342195
    maljawhar
    Member
    • Topics: 2
    • Replies: 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

    October 2, 2016 at 6:47 am #342199
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54655
    • ☆☆☆☆☆

    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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