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For Example:
The Receivables Control Ledger proforma T account has 5 possible types of entry on the Dr side and 5 on the credit side as follows.DR………….Receivables…………..CR
Balance bf……………….Cash Receipts
Credit Sales……………..Irrecoverable Debts Expense
DH Cheques…………….Discounts Allowed
Refunds…………………..Sales Returns
Interest…………………….ContraOnce you can remember the Receivables T account, payables is easy to remember:
DR……………Payables……………CR
Cash Paid………………….Balance bf
Discounts Received…….Credit Purchases
Returns In………………….Refunds
Interest………………………ContraThen you can use this as a trigger: Rec 5T5 Pay 4T4
Remember REACT for accruals and prepayments.
R…..Reverse
E……Enter
A……Adjust
C.T. ..Close T-accountsIn detail..
For prepayments each year we go through 4 steps:
1 reverse prepayments brought forward…..dr expense cr prepayments
2 enter payments during period………………dr expense cr cash
3 enter any prepayments at the end of the period..
dr prepayments (and balance goes to SFP) cr expense
4 close of accounts, transfer to IS……………dr IS cr Expenseand same 4 steps for Accruals:
dr accruals cr expense
dr expense cr cash
dr expense cr accruals (goes to SFP)
dr IS cr expense
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