Solicitor Accounts LPC (2020) Full Summary Notes with Worked-through examples made for the Accounts module at City, University (has been used used by Ulaw and BPP students who have obtained Distinctions! And can be used for any LPC Accounting module!), 20 pages, WITH THE NEW 2019 SRA RULES! - achie...
RULE 1: DOUBLE-ENTRY BOOKKEEPING
Every transaction requires 2 entries (i.e. double entry), one in debit + other credit column
Cashbook records relationship between business + bank cheques, transfers, bankers draft, cash
E.g. Peter sells computers on 5th Sep for £1000 cash
Peter pays rent on premises on 6th Sep of £600
Cashbook
Date Detail Debit (£) Credit (£) Balance (£)
Sep 5 Balance b/d 6,000.00Dr
Sale 1000.00 7,000.00Dr
6 Rent 600.00 6400.00Dr
RULE 2: CREDIT TRANSACTIONS
First record that have billed somebody (1st 2 entries) as no money in NOT in cashbook so entry
(1) in ‘cost/sale account’ and entry (2) in specific person/bus account
Receive: put it into cash book (2nd 2 entries) entry (1) cash book + entry (2) in person/bus acc
4 entries for credit transactions
E.g. 5th Sep Michael, an accountant sends Sid an invoice for £6000 for accountancy services
23rd Sep Michael receives a cheque from Side for £6000
RULE 3: VAT IN ‘CASH’ TRANSACTIONS
4 entries: 1 set of double entries for the net sum and another set for VAT charge
Entries (1) in ‘cashbook’ of net sum and entry (2) in cash book of VAT, entry (3) in VAT ledger and
entry (4) in sale/purchase or specific ledger
Sold goods= debit in ‘cashbook’ (and VAT in debt) and credit in ‘VAT’ and credit in ‘sale account’
Purchase goods= credit in cash book (and VAT in credit) and debit in VAT stock/relevant ledger
Sold goods – e.g. George Sold goods for cash for £200 + VAT
Cashbook
Date Detail Debit (£) Credit (£) Balance (£)
Aug 1 Balance b/d 5,000.00Dr
Sales 200.00 5,200.00Dr
VAT 40.00 5,240.00Dr
Purchases (of stock)
Date Detail Debit (£) Credit (£) Balance (£)
Aug 1 Balance b/d 2,000.00Dr
2 Cash 900.00 2,900.00Dr
2
, Solicitors Accounts Condensed Notes
RULE 4: VAT IN ‘CREDIT’ TRANSACTIONS
6 entries (1) invoice (cost + VAT) , (2) individuals Acc & (3) receipt (cashbook + individual Acc)
Invoice: Entry (1)= cost account of principal sum (credit); Entry (2)= VAT account (credit)
Indiv Acc: Entry (3) net sum and Entry (4) VAT both as debit on individuals account
Receipt: Entry (5) cashbook (debit) and Entry (6) individual account (credit)
E.g. Aug 1: George issued an invoice to Martha for services for £1,200 plus £240 VAT
Aug 10: George received a cheque for £1,440 from Martha
Aug 16: George issued a bill to Grays Litho for services for £1,500 + £300 VAT
Aug 20: George received a cheque for £2,300 from Grays Litho
RULE 5: DUAL LEDGERS & RECORDING RECEIPTS AND WITHDRAWALS
Client money v office money
Note: same rules with double entry, look if cashbook or individual client account, remember
‘cashbook’ records all office and all clients money then see individual client account to see if
there is money to pay for any costs (for client), if not use office money
RECORDING RECEIPTS OF MONEY
E.g. Received cheque £2,000 from Matrix for accounts of cost on 15 th Sep
Entry (1): client money came into firm, into cashbook in ‘debit’ in client account
Entry (2) put as credit into individual ledger in client account
E.g. Cardorn pays for a local search for purchase of new premises, fee is £150
Check If money in client acc to pay, if not use office money here use office money
Entry (1) cashbook in office credit amount + Entry (2) into client ledger in office acc as debit
Cash book.
Office account Client account
Date Detail Dr (£) Cr (£) Balance (£) Dr (£) Cr (£) Balance (£)
15/9 Balance b/d 9,000.00Cr 98,000.00Dr
Matrix Ltd 2,000 100,000.00D
r
16/9 Cardorn Ltd 150.00 9,150.00Cr
Client name: Matrix Limited Matter: Purchase of new business
Office account Client account
Date Detail Dr (£) Cr (£) Balance (£) Dr (£) Cr (£) Balance (£)
15/9 Cash: on a/c 2,000 2,000.00Cr
of costs
Client name: Cardorn plc Matter: New premises
Office account Client account
Dat Detail Dr (£) Cr (£) Balance (£) Dr (£) Cr (£) Balance (£)
e
2/9 Cash: Comm 16.00 16.00Dr
search
Cash: local
16/9 search 150.00 166.00Dr
4
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