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Mastering Book-Keeping

# Mastering Book-Keeping

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08/14/2013

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Dr.

A. T. Oﬃce Supplies

Cr.

200X

200X
May1 Balance c/d 380.00
26 Purchases NL9 620.00

May 28 Bank CB17 380.00
31 Balance c/d 620.00
1,000.00

1,000.00

Jun 1 Balance b/d

620.00

Fig. 35. Postings to the purchase ledger.

1. Postings to the purchase ledger

Suppose that, as at the last day of April 200X, A. Frazer owed A. T. Oﬃce

Suppliesthesumof£380.00.Onthe26Maytheﬁrmpurchasedfurthergoods

from A. T. Oﬃce Supplies for £620. On 28 May the ﬁrm paid its April

statement by cheque. This is what the ledger postings would look like (and

remember, they have to be recorded in the books of prime entry ﬁrst).

2. Postings to the sales ledger

Suppose that K. Gange is a customer of A. Frazer, and at the close of last

month (January 200X) his a/c balance stood at £2,100.00. Suppose that on 4

February Gange returned goods to the value of £100.00. On 6 February

Gange purchased a further £1,000 worth of goods. On 12 February he paid

his January a/c, after deducting the returned goods and a 2½% agreed

discountforpaymentwithin14days.Gangethenpurchasedafurther£980.00

worth of goods on 18 February and then £220.00 worth of goods on 26

February. This is what the ledger postings would look like:

Dr.

K. Gange

Cr.

200X

200X
Feb 1 Balance b/d 2,100.00 Feb 4 Sales returns NL19 100.00
6 Sales NL18 1,000.00

12 Bank CB6 1,950.00
18 Sales NL18 980.00 12 Discount allowed NL22 50.00
26 Sales NL18 220.00 28 Balance c/d 2,200.00
4,300.00

4,300.00

Mar 1 Balance b/d 2,200.00

Fig. 36. Postings to the sales ledger.

58

The cash bookentries are, by their very nature, one side of the double entry. All

you have to do now is to make the other side of the entry:

Step by step

1. Every time you post in the cash book, make an opposite posting to the

relevant personal account in the bought or sales ledgeras appropriate. The

narrationagainsteachofthesepostingswillbe‘cash’(ifthepaymentwasin

the cash column of the cash book) or ‘bank’ (if it was in the bank column).

Nowyouhavetopostanydiscountsfromthediscountscolumn.Remember,

althoughthecashbookispartoftheledger,thiscolumndoesnothavesuch

status; it is a single entry element sitting inside a ledger division, while not

exactly being part of it. So the postings from the discounts column must be

twofold, just as for any other prime entry source.

2. Post the discountsto the correct personal accounts, making sure theyare to

the opposite sides to the ones on which they appear in the cash book.

3. Post the column totals to the other side of the ‘Discount allowed’ or

‘Discount received’ accounts in the nominal ledger as applicable, to

complete your dual posting. Use the name of the account to which the

dual posting has gone for this purpose in all ledger posting.

Posting from the petty cash book

The petty cash book may, or may not, be treated as part of the double entry

system. If it is, as with the cash book, its entries will themselves already contain

one side of the ledger posting; you have only to make the other. However, this

one aspectof thedual entryis itselfsplit intovarious postingsto nominal ledger

accounts and this is why analysis columns have been used. Their individual

totals, together with the VAT column total, provide the ﬁgures to be posted to

the various accounts denoted by their column headings. The net invoice total

column is not posted anywhere.

59

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