1. The Cash Book

2. Revision From Previous Lesson
1. You work for Spike’s Ponies, sales are analysed into tack and clothing. Purchases are analysed by supplier account for the following transactions in the day books, use today’s date:
Sold tack goods on credit to La Dauphine, £400 + VAT.
Sold clothing goods on credit to SeaSpray Services, £150 + VAT.
Goods returned from La Dauphine £80 + VAT.
Purchase goods on credit from Tiny Bubbles Plc £1,200 inc VAT.
Purchase goods on credit from Majesty £800 + VAT.
2. Transfer these over to the double entry system.

3. Aims of the Session
The two column cash book
The analysed cash book

4. The Cash Book Book of prime entry and part of the double entry system.
Book of prime entry feeding to bank control account.
Used to record bank and cash payments.
Will record cash and credit sales/purchases

5. Uses of the Cash Book Controlled by the Cashier
Receipts from:
Cash sales.
Trade receivables.
Loans from the bank.
VAT refunds.
Capital introduced by the owner.
Payments
Cash purchases (not necessarily notes & coins).
Trade payables.
Expenses.
Bank loan repayments
VAT payments.
Purchase of non-current assets.
Drawings
Debit
Credit
Controlled by the Cashier
Must have adequate safeguards - Report dodgy dealings!

6. Layout of the Two Column Cash BookDr
Cash Book Cr
Date
Details
Acct Code
Cash
Bank
Money In
Money Out
Used for both cash and bank receipts and payments.
Account code will cross reference to general ledger

7. Writing Up the Cash Book
Fanny Wackford sets up a new business. The following transactions take place during the first month and are entered in her cash book, which is part of the double entry system: 1 June – Started business paid £10,000 into the bank. 4 June – Bought a delivery van for £7,500 paid by cheque. 7 June – Paid rent for the month £500 paid by cheque. 12 June – Transferred £1,000 from bank to cash. 18 June – Paid £500 wages in cash. 20 June – Received a loan of £2,000 from the bank 26 June – took drawings of £200 in cash.
See hand out

8. Transfer to the Double Entry System - Capital
1 – Introduction of capital to the business:
General ledger
Capital Account (GL3100) Dr Cr
1 June Bank CB52 £10,000

9. Transfer to the Double Entry System – Non Current Assets
2 – Bought a delivery van, a non current asset:
General ledger
Vehicles Account (GL0750) Dr Cr
4 June Bank CB52 £7,500

10. Transfer to the Double Entry System – Expenses
3 – Paid rent and wages:
General ledger
Rent Account (GL6350) Dr Cr
7 June Bank CB52 £500
General ledger
Wages Account (GL6380) Dr Cr
18 June Cash CB52 £500

11. Transfer to the Double Entry System – Loan Received
4 – Received a bank loan:
General ledger
Bank Loan Account (GL2140) Dr Cr
20 June Bank CB52 £2,000

12. Transfer to the Double Entry System – Drawings
5 – Took drawings from the business:
General ledger
Drawings Account (GL3200) Dr Cr
4 June Cash CB52 £200

13. Molly Todgers
Complete the following cash book entries and transfer the amounts to the double entry system for Molly:
1 Apr – Balances b/d cash £300, bank £150.
4 Apr – Receives a cheque from T Wright, a trade receivable, for £98.
10 Apr – Paid a cheque to J Crane a trade payable for £265.
15 Apr – Cash purchases £275 paid in cash.
18 Apr – Paid by cheque the amount £120 to T Lewis.
22 Apr – J Jones a trade receivable settles her account, £80 in cash.
26 Apr – Cash sales £110, cheque received.
30 Apr – Balance the cash book.
Amounts are transferred to the double entry system daily.
Molly is not registered for VAT

14. Molly Todgers – SLCA SLCA Date Description Amount 4 Apr
Bank – T Wright 98
22 Apr
Bank – J Jones 80
Why are the entries credit entries? Check all students have the same entries

15. Molly Todgers - Sales Ledger Entries
Entries are then made into the individual accounts of the customers.
Sales ledger
T Wright Dr Cr
4 Apr Bank £98
Sales ledger
J Jones Dr Cr
22 Apr Bank £80

16. Molly Todgers – PLCA PLCA Date Description Amount 10 Apr Bank - Crane
265.00
18 Apr
Bank – T Lewis
120.00
Why are the entries credit entries? Check all students have the same entries

17. Molly Todgers - Purchase Ledger Entries
Entries are then made into the individual accounts of the suppliers.
Purchases ledger
J Crane Dr Cr
10 Apr Bank CB £265
Purchases ledger
T Lewis Dr Cr
18 Apr Bank CB £120

18. Cash Sales
General ledger
Sales Account Dr Cr
26 Apr Bank CB88 £110

19. Cash Purchases General ledger Purchases Account Dr Cr
15 Apr Cash CB88 £275

20. Analysed Cash Book Same as the cash book, but with extra columns!
Helps to record VAT, specific or expenses.
Discounts allowed and received are not recorded in the cash book but as a credit note.

21. Layout of the Analysed Cash BookDr
Cash Book
Date
Details
Acct Code
Cash
Bank
VAT
Cash Sales
Trade Receivables
Other Income
Money In Cr
Cash Book
Date
Details
Acct Code
Cash
Bank
VAT
Cash Purchases
Trade Payables
Other Expenses
Money Out

22. Tapley’s

23. Transfer the balances into the General Ledger

24. Dishonoured Cheques Must be taken out the bank.
Reverse the transaction
Debit SLCA
Credit Bank

25. Cash and Bank Control Accounts
General ledger
Cash Control Account Dr Cr
1 Dec bal b/d
5 Dec Cash book 912
1,167
6 Dec bal b/d
Used when the cash book isn’t part of the double entry system.
Acts as a totals account for both the cash and the bank.
5 Dec Cash Book 1,029
5 Dec Cash book 138
1,167
General ledger
Bank Control Account Dr Cr
1 Dec bal b/d
5 Dec Cash book 1,075
1,950
6 Dec bal b/d ,235
Using figures from Tapleys
1 Dec bal b/d
5 Dec Cash book 1,235
1,950

26. Questions?

27. Look Forward To:
Trial balances
Capital versus revenue expenditure