Please can somone help me, i still cant get my head around PLCA and SLCA, i can never remember what information goes in there and where, if its a DR or CR
PLCA, when you make a purchase from the supplier these are creditors so the gross value of the (net plus vat) invoice goes in the credit side, when you pay them the payment goes on the debit side to reduce the balance of the account.
SLCA, when you make a sale, the customer is in debt to you so they are debtors therefore the gross value of the invoice (net plus vat) goes on the debit side, when they pay you it goes on the credit side as this reduces the balance of the account.
These of course are the total values of the sales and purchase day books and for the the cash book both reciept and payments sides.
For individual accounts you would go to the subsiduary sales ledger or subsiduary purchase ledger and post individual invoices and payments/reciepts to the individual accounts all of which once agian come from your day books and cash books and go to the same sides as the control accounts.
I find the best way to remember (we all remember in different ways) is to see customers as debtors as they are in debt to you, and suppliers as creditors as they are giving you credit. Because you require a double entry when applying values to these accounts you could look at them in reverse and apply;
PEARLS,
DR Purchases Expenses Asset
CR Revenues Liabilities Sales
Here you see that purchases are a debit in the main ledger whereas sales are a credit in the main ledger (remembering that control accounts aren't part of the main ledger and the same rules don't apply) you would just reverse these for the control accounts.
Personally I just use the debtors and creditors logic when I need to know where to post things.
Steve
-- Edited by Rhianrach on Monday 12th of April 2010 01:23:01 PM
I try to remeber that discount allowed is an expense (DR) and recieved is the same as a payment (CR)
My tutor went round the class asking us debit or credit as we went through the trial balance and I got discounts allowed and it twisted my melon so I just blurted out credit, fortunately no-one knew till he simplified it to us
Of course I always forget to post them and realise later when things don't quite add up.
Steve
-- Edited by Rhianrach on Monday 12th of April 2010 01:55:24 PM
Pearls is OK for people who remember things that way and understand accounting concepts. I always taught beginners that you dr the account which receives (goods, cash or services) and credit the account the gives (goods, cash or services). That way you are looking at accounts in isolation.
I'm also learning, but haven't come across PEARLS yet.
My way is to visualise an "audit" of T-accounts, basing entries on either the Cash Book, or Sales/Purchases.
eg: a Sales invoice is going to create a DR entry in a Customers (Debtors) Ledger account, therefore the Sales Account must be CR. It also follows that payments received (DR in Bank Account) must be CR on the Customers account, as are any Discounts Allowed.
It gives me a bit of a headache at the moment, but (no pain, no gain) I think it will become easier later.
-- Edited by ProBowlUK on Tuesday 13th of April 2010 02:30:53 PM
-- Edited by ProBowlUK on Tuesday 13th of April 2010 02:33:35 PM
This is a great help to me also as I am learning and its so difficult to remember which side to put it on. I always try and look at the double entry and most of the time I know where one of them goes and so the other entry must be opposite
I also try to look at it as:
Assets/Expense/Drawings are always debit to increase them and credit to decrease them
and
Capital/Liability/Income are always credit to increase them and debit to decrease them
which is on the same lines as PEARLS.
I also get headaches most evenings trying to work all this out and when you are home learning it is much more difficult
