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Ray2000


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Student question on analysed cash receipts book
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My Level 1 study manual poses the following question in the chapter on the analysed cash receipts book........

"When a business receives cash from a cash sale, is any entry made in the VAT column of the analysed cash book?"

The answer given by the book is
"Yes. There are no books of prime entry for a cash sale  and therefore no entries regarding VAT will have been made.
The correct double entry will be: Credit VAT account, Debit SLCA".
Now, would it not be more appropriate to Credit VAT; Credit Sales, and the debit side is the entry in the Cash Receipts Book?
What would you say is the correct answer?


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.................just an ICB student, at the moment.
ADAS


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Hi Ray

It makes much more sense to do as you said. I only use SLCA for Credit Sales.

I don't see how the example in the book works. You'd need to Adjust SLCA for the cash received and also the amount of the sale, so

Dr SLCA
Cr Income

With the net sale

Dr Cash Received
Cr SLCA

With the gross receipt.

Seems a bit mad to me.



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Tony

Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
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ADAS


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**double post



-- Edited by ADAS on Wednesday 21st of December 2011 11:34:37 AM

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Tony

Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
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ClareB4


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I agree with both of you that the SLCA is for credit sales - cash sales don't touch the sales ledger, just the sales nominal account.

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Bruton Young Bookkeeping - www.brutonyoung.co.uk
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