More About Double Entries
On May 9th Pepe bought an oven liner on credit from Ovens 'R' Us. The equipment account is the receiver and must therefore be debited. (Remember the principle; Credit the giver, debit the receiver.)
| Equipment / Machinery Account | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DR | CR | |||||||||
| Debit Side | Credit Side | |||||||||
| Date | Details | Folio | Amount | Date | Details | Folio | Amount | |||
| May 01 | Balance b/d | 19,015.00 | ||||||||
| May 09 | Credit purchase of oven liner (Ovens 'R' Us) | C950 | 160.00 | |||||||
| May 15 | Sale of hot-plates | C963 | 75.00 | |||||||
| May 31 | Balance c/d | 20,000.00 | ||||||||
| £20,075.00 | £20,075.00 | |||||||||
| June 01 Balance b/d | £20,000.00 | |||||||||
The above account has been debited because it is a receiver. There now has to be a credit to another account. In this case it is the account of Ovens 'R' Us.
| Ovens 'R' Us Account | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DR | CR | |||||||||
| Date | Details | Folio | Amount | Date | Details | Folio | Amount | |||
| May 09 | Credit purchase of oven liner (Ovens 'R' Us) | C950 | 160.00 | |||||||
| May 23 | Payment for oven liner | C950 | 160.00 | |||||||
On May 9th Ovens 'R' Us sold the oven liner on credit. They were the giver and their account is credited. On May 23rd they received payment for the goods and there account was debited. This second transaction (a debit) will require a credit to be made to another account; The bank account.
| Bank Account - Pepe's Pizza Parlour | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| DR | CR | |||||||||
| Debit Side | Credit Side | |||||||||
| Date | Details | Folio | Amount | Date | Details | Folio | Amount | |||
| Balance b/d | 1,640.00 | |||||||||
| May 10 | Purchase of flour | XYZ | 200.00 | |||||||
| May 23 | Payment for oven liner | C950 | 160.00 | |||||||
| May 31 | Balance c/d | 2,000.00 | ||||||||
| 2,000.00 | 2,000.00 | |||||||||
| Balance b/d | 2,000.00 | |||||||||
Before the payment was made to Alberto, Pepe owed the bank £1,840. With a payment to Ovens 'R' Us this figure has risen to £2,000.00.
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