In the second session we dealt with value added tax, VAT and application to the accounting cycle. And this session, we will have a look at inventory and how we can create an accounting system. We will deal with the sales journal, the purchase journal, the petty cash journal, the creditors ledger, the debtors ledger and how we account for these transactions in the general ledger. First of all, we need to have a look at inventory items that are bought with the intention to satisfy price and to generate profit or classified US stock or merchandise. In the business model, we bought newspapers for three range each We sold them for five grand. So that is newspapers where stock stock is accounted for under current assets in the balance sheet.

So we'll have fixed assets and current assets and stock will be classified as current assets. The value of each item that was sold is transferred from the stock account on the balance sheet to the cost of sales account in the income statement. So when we buy stock, we will account for it in the stock account, that is a balance sheet item. And as we sell it, we will transfer the cost to the cost of sales. Again, there's that isn't income statement item. The stock account in the balance sheet is debited when the stock is purchased.

And when the stock is sold, the stock account will be credited and the cost of sales account debited and the difference between sales and cost of sales is gross profit. So we bought us newspapers for three rent and we sold them for five and then we made a cross profit of two rent. Let's look at this example. An entity conducts business by buying and selling stationing. The entity buys four pins for 10 grand each and sells one thing for 15 million. So we bought four bins at 200 each.

So the total cost was 40 grand. And then we sold one thing for 15 when sales was 15 million bucks but now we need to take that thing out of our store. This one stain that was the cost this thing and now we have only three pins at tearing each and that will leave us with city rain. So one time stain rent and 15 listing, five grand, gross profit. Now let's have a look at the accounting software. So, we bought four things at 10 grand each.

So total cost 40 grand and we can say that we bought him on account. First of all stock stock is an asset assets plus asset plus, when an asset becomes more, we need to debit 14 then reporting on credit creditors, creditors liability, so liability liability increased plus if a liability becomes more we need to create it 14 and then we just copy and paste stock 40 rained David 40 rain created Created and then we sold one thing for 15 million sales, sales income, income increased income plus income becomes more we need to create it 15 minutes and we bank the money bank asset as a plus because the bank balance increased as a plus David 15 and recopying science 15 range thing 15 min. And now you can see we have sales of 15 range and cost of sales is zero now sales and cost of sales or intersect into items.

At this moment. It means that we made 15 rain And that we have 14 in this stock account. Now we know that we only have three things to the value of secure and in the store. So we need to take things out of the inventory account and allocate it to the cost of sounds again. So stock an asset minus was a stock became this minus and we need to create it theme rate. Cost of service, it's an expense account expenses became more plus, expense plus need to debit with thin rain and we copy and paste, inventory Thin Red cost of sales 10 red, and now you can see a 15 created this thing, David, and that will leave us with the foreign traded and there is a gross profit We have 15 grand in the bank 40 an ting created will leave us with city debit.

And that is the cost of our stock that we have in the store. Let's have a look at the theory regarding the sales journal says can be done for cash or on account. So I can sell merchandise to a person and he can pay for it now or he will pay for it later on. If he pays for it like on you know, we'll put it in his account and you will be a data so he owes me money. All sales in returns are accounted for in the sales journal. So all the sales transactions will be summarized in the sales journal.

Sales invoices are numerically numbered and accounted for in the sales journal. All these sales invoices will be numbered and it will follow numerically. And the reason behind it is to make sure that we account for all the sales transactions. Okay notes that are issued for returns on American government and are accounted for in the sales journal. So we can for credit match in the sales journal, and they will also be numerically numbered. The sales journal is a summary of the cells and treatments and is accounted for on a monthly basis.

So each and every month sales will be accounted for in the sales journal and at the end of the month, we will close it off and we will transfer the title to the general ledger. And all the transactions in the sales journal will be accounted for in the data's ledger. interest in the cell general or candidate for the data's ledger. The data's ledger is a detail summary Each database transactions and will show each sales transaction credit light and payment that have been made to or received from the data. So all the database transactions will be accounted for in the data's ledger. Now in the sales journal, all the transactions will have either sales invoice or direct credit.

So when we sell, we will issue a sales invoice. And when a data returns stock, we will issue credit net. Here's an example of a sales journal. Now you can see the sales journal will have different columns. You'll have a date column, a data column, a description, a reference column, and that reference de is the account number for a data so we will reference that So with that we know we do allocate it to indeed this journal will account for the invoice numbers and the credit match and then we will account for each and every transaction. This the total amount of the invoice our money that we are going to receive and the money that we are going to receive on the off of the receiver of revenue.

So, transaction one, invoice one on the second of january two AGC on credit 414 rent. Remember here, first of all 114 times 100 114 equals 100. That is our portion of the sale and 114 times 14 114 equals 14. That is the receivers money So we are going to split it in these columns that's our money that is the receivers money first transaction type on the second the data was a JC description was science their account in the dataset ages I jc 001. invoice number one, the total amount of the invoice one one for a portion of the cell hundred trade and sauce portion 14 transaction two English two on the third to remain on credit 41140 So the third in my in sales reference number invoice two. Now you can see we had invoice one and as invoice two and it will be invoice three, four and five.

So the invoice numbers are follows numerically the amount of salt for 114 Our money and what we are sauce and written 40 English three on the 17th to PCB on credit for 11 400 So, on the 17th PCB sales reference number invoice 311 413,000 in his hours on 400 is the receivers and then in transaction for PCB returns then each stock on credit note one is issued on the 18th for three four teaser. So, they bought for 11 400 and then the return 3420 So, on the 18th PCB returns reference number, credit not one and now you can see we need to put a minus in front of the amount was ourselves reduced their attendance and that resulted in for 1140 Hundred and they returned 3420 6000 is what they returned to us and for 20 years what we need to buy less over to the receiver of revenue transaction for invoice for on the 19th Jesse for 35,000 Bentley's 10% discount and this instance we just saw five 700 this 10% that is 570 and that will equals 5130.

So on the 19th I Jesse invoice for 503 zero x leading amount, Salzman transaction six invoice for this issue to PCB on the 20th for the replacement of the damage stock. So, these are returned to stock if the four to zero and then we issued a new invoice. was far to replace the stock the linear PCB PCB in was 43420 3009 is ours 420 is the receivers transaction seven in wish to was calculated incorrectly and should have been for 186 credit is issued on the 31st you correct that mistake so we salted him for 1140 but the invoice should only have been for one or two six. So now we have in one one for now we conscious go to invoice two and change the amount to one or two six because that is our fraud case in business. So we need to go and issue a new printed metric that to the 31st in my in to correction invoice to create it was One form because ourselves all lists now 114 hundred is ours 14 radio receivers and then we title the columns.

So total sales 17670 that is what he did is there was no sales 15 500 and V 80 217. So we made a summary of it. And now we need to transfer it to the general ledger. First of all sales income, income, increased plus income becomes more we need to create it and we will create it with 15 500. That one is accounted for the next one VAT, liability liability became more if a liability becomes more we need to create it to 170 to 170 And that's what the data is is is no taters as it as it became more Plus, if the asset becomes more we need to David, David did 17670 and you can see that this increase in balance. If you added those to create it it will total 17670 and then transaction and the cost of goods that was sold was 6400 grand.

So the cost of those goods that was sold is still in the inventory account. So we need to take it out of the inventory account and allocate it to the cost of sales. It can't stop an asset as it reduced because we don't have the stock anymore. If stock becomes less we need to create it created with 600 cost of sales is an expense account expenses became more Plus, if expenses becomes more, we need to debit six 400. And we need to add up the debits and the credits. This is 70 02424070 and you can see that the debits equal to the credits and now we need to copy and paste into the general ledger.

So we editing once and then we copy and paste cells. So on the 31st of January from the sales journal 15 500 created so we can sit for selves. Now we will put in some data we'll put in the month, and we'll put that it comes from the sales journal, so that we can go and track it if we need to. So if we want to see how the sales are made up, we can check for 50 and 500 we see that it comes from the sales journal. And then we go into the sales journal and you can see 15 500 and we can see that battle has been made on and then data's control 17670 David, cancel that VAT 21702170 and then cost ourselves six 400 400 and stock six 400. So anything once and then we just copy and paste into the general ledger and then we Need to get accounted for in the data's ledger in the debtors ledger you'll see that this account for agency and account for Emma in an account for PC v. So we will see I just see invoice 114 because that's what the data is that I was 100 years is the hundred plus the 14 so I Jessie's an asset, the asset become small, when an asset becomes more we need to debit So, on the second invoice one and within 14 next transaction in my in invoice two in my inner can mean is an asset.

The asset becomes more plus as it becomes more we need to debit 11440 then invoice three PCB PCBs and acid as it becomes more plus if an asset becomes more we need to debit 11 411 400 and then we should accredit the credit that was for PCB 3420. So the return to stop So, the acid will reduce will become less, we need to create it and we created three four to zero and then we issued an invoice PCB PCB invoice three 420. We issued in in credit night for Emma in credit not to EMI in credit it 114 and then we need to balance the accounts. invoice 111 for invoice for 5130 the David's five two double four There's no credit. So we need to put in a credit for have to double forward to balance the account. And we will transfer that to the debit side.

And that is the balance of the data at the end of the month, the same of Emma in debit 1140 and then we have a credit of 114. So 1140 this 114 and we will need to put in a credit for one zero to six to balance the account. And that one or two six is the closing balance of the data. PCB 11 403 420 total 148201 credit 340 zero we need to put in a credit of 11 400 to balance the account. And that will be our balance at the end of the month for PCV and then began at a five to double fold The one zero to six and the 11 430 plus 17670. And in our general Legion, we will have a debit for 17670 in the data is control.

So, if we want to see a breakdown of that title, then we go to the data's ledger and we can see I just see as as far to that will fall in my end as as one or two six and PCB is us. 11 400 and the title for datas Oh 17670. So, we summarize the sales for January. We transfer the transactions to the datas ledger. We transferred the titles to the general ledger. And in the general ledger there was a datas control 1760.

And the data's ledger will show with the data's were made up of agency B, C, D, and ima in and the title was 17670 and that corresponds with the 17670 in the general ledger. Now we need to have a look at the purchase journal. Now the purchase journal, and the creditors ledger, stock or other items can be bought cash or on account. purchases that are done on credit are normally paid between 30 and 90 days. And purchases appears on made from the entities that are Cool creditors. So I can buy items from entities and I can buy for cash or I can buy for on account and I will only settle the account let them now for the time being that the account is outstanding, that account is called a creditor.

Those people money credit is our liability and become more by being traded all purchases and it is our capital in the purchase journal. The purchase journal is a summary of all the purchase transactions for every month. Only purchases will be summarized in the purchase journal and at the end of the month, we will close it off and we will transfer the title to the general ledger and all the transactions will be transferred to the credit this ledger opens transactions is in the purchase ledger entered into the creditors ledger. The purchase journal is a third of every month and the third was accounted for in the general ledger. And the creditors ledger is a detailed summary of all the creditors transactions and will take into account purchases, returns and payments. And the documents that we use to summarize the purchase journal, the purchase invoice and the returns will be a credit net.

Now, we have a purchase journal here you can see there's a date created, the description and reference number, invoice number, credit amount, total amount, the amount, including the it and then what we bought stock, stationery, telephone, water, electricity, and sundry. And these amounts will exclude VAT We will show our VAT that we are going to claim back in a separate column. So first transaction purchase stock from Mr d to the value of 11 400 on the second and we receive an invoice 1234. So on the second mid description we bought stock, we reference it to that creditor invoice number 1234. The amount we bought for 11 411 400 times 100 divided by one wonderful is 10,000. That's the man exceeding that.

And 11 400 turns 14 divided by 141 400. That's the very moment that we are going to claim back from the receiver of revenue. So we bought stock, we put it in the stock column 10,008 The VAT portions 1410 transaction to purchase station from vl 411 for pain was 6547 on the third the third l what we bought description stationery reference numbers 6447 invoice number 114 we bought stationery hundred rent when 14 transactions we purchase stock from MIT to the value of 114,000 please 10% discount. So one 4000 less 10% that will equals one to 600. So, when you deal with invoices and we give or get 10% discount, then we will just subtract 10% but we can't do it with that together. Like the variables, we need to take the rate of 114 and 14 and 14 if we give 10% discount, we will subtract 13% and when we receive 10% discount, we will just subtract 13% from the fourth mid on 2471 A to 600 that was the invoice amount 90,008 is what we buy for the stock and we claim back well 600 returned damaged stock to mid and received treatment non one on the food 2200 so on the mid return stock created non one and then we minus goes out stop which is reduced.

So minus 20 to 800 minus 20,000 and minus 200 200 of that so we can't claim that that bank so we need to manage it. Then transaction file receives the telephone account from telco six ICT for 31st. Dell telephone telephone. invoice number six set for put it in the telephone column 684 VAT. Six receives the water electricity come from stats for 570 on the 31st 31st. That's water electricity.

Invoice number 570 500 grand in the water electricity column 70 rent in the back on transaction seven receives invoice number eight triple nine 457 ran from stats for cleaning services on the 31st 31st that's cleaning services invoice number 57. Now you can see that this night Cleaning column. Yes, so we put in this sundry column. And we use that reference a clean 30 Rand and seven Rand, we will claim back from the receiver. And now we accounted for all the purchases in January, then we total the columns, add up all the columns. And what you need to do is you need to add up all these columns and cross cost in back to that column D, make sure that it equals that column.

And that's what we call cross costs. So add up that way, that way, that one, that one, that one, and then I add up all these columns and make sure that it equals the 1965. And then I need to do a bit of thinking stop some acid as a class because I bought some stock 80,000 as it becomes more David 30,000 counted for that one next one station 100 train station is an expense expenses became more plus, David hundred trained. can't pull that telephone 600 telephone is an expense plus an expense becomes more David's 600 trend canticle that then water electricity 500 expense expense plus expense becomes more we need to debit 510 for that one, then sundry. We need to go and have a look and see sundry 50 rent we see that was for cleaning services, cleaning service an expense class, we need to debit the expense 50 grand and then VAT VAT is a liability.

And we are going to claim that amount back from the receiver of revenue so the liability liability is going to To reduce, if a liability becomes less we need to debit we are going to debit it with 1137 510 for that, and then credit as we are, the creditors 92625 creates as a liability, the liability became more Plus, if a liability becomes more, we need to create it nine to six to five, and then we add up the David's nine to six to five, and at the credits nine to 16 five debits are equal to the credits. And now we need to copy and paste. So we thought once and now we just need to copy and paste stock 80,000 in inventory sale on the 31st from the purchase journal, it Thousand candidates for that one Station 200 Station 100 and for that one telephone 600 debit telephone 600 debit water electricity 500 debit 500 cleaning 50, clean 50 creditors nine to 65 92625 credit and VAT 11 375 debit, add up all the debits and credits if you add up all the dividends, you'll get to nine to 65.

If you add up all the credits, nine to 65 system isn't balance and then we need to transfer all the transactions to the creditors ledger. So as we can see from the board and how much we Adding now mid is that creates a liability. So mid we bought for 11 400 so the liability became more plus if a liability becomes more we need to create it. It was 1234 it was 123 411 400 next cretin Wi l Wi l 654 714. liability liability increased created. One one for mid one or two 600 mid invoice 12471 to 600. Then mid, we returned some stock and received the created this two to 800.

So when we return the stock the liability is reduced and when a liability becomes less we need to debit to It hundred so two to 800 these D David and then we bought from Tell, tell invoice 1246684 so that was a liability liability became more plus created and then starts 570 stats 570 starts as a liability liability became more credit 570 and starts again 5757 then we need to balance these creditors 11 400 plus one or two 600 federal credit 114 thousand and we have a credit 22 item to balance the account we need to put in a debit of 912 and we transfer that debit to the credit side and that's the balance of mid 912 hundred That is why to mid WL, we bought for one one for credit, there was no debit, we need to put in a debit 414 rent and we will transfer down 114 that is what we are Wi l. And we will do the same with Dell, EMC except for full and we will do the same with stats We are in 67.

And if I add up all my credits that balance day, balance day, that balance day, that balance day, then okay to a total of nine to six to five. And that's a created and if we go to the general ledger credits 1965 Now, if I go into the general ledger, I can see I have a credit you know in 265. And if I want to see the breakdown of that, then I go to my creditors ledger I can see tell 912 hundred one For 667 and then I can see in my general ledger that I bought stock to the value of 80,000. And if I want to have a look at that amount the and I want to see the breakdown, I go to the purchase journal and I can see I bought stock to the value of 80,000. And I bought from mid for 10,000 and I bought from mid for 90,000 and then our return stock to the value of 20,000.

And if I want to see that transaction for whatever Look at that, then I go to invoice 1234 and I can make sure that it was stock that I bought. So in the accounting cycle, we are counted for purchases and we transferred into the creditors ledger we transfer the titles to the general ledger. In here we add a total of nine to 65. That was the title of the creditors and in generally geriatric creditors control account 9262 for credit. If I want to see the breakdown on that title D, I just go to the creditors ledger. Now we can go in and have a look at petty cash journal.

Petty cash is money that is kept on the premises to pay for transactions that are small or minor venues. So we will have a little box in the premises is a few randomly and we will pay for transactions of minor values. transactions from the petty cash or cash To form the petty cash journal, petty cash batches that are pre numbered or issued for every transaction and attached to the purchase invoice. So if I want to send one of the employees to go and buy milk, I will give him 10 red and I will issue a particular dispatcher and he will sign for it and then he will bring back a purchase invoice to the value of 10 grand and I will attach that to the petty cash that if he doesn't bring back a invoice then you have signed for the petty cash voucher and it means that he owes me some money.

Cash received from datas and cash sales or as a norm not going into the petty cash bar or deposited in the bank account for in the cash book in my opinion the small receipts from data or cash out or put into petty cash. So normally we bank on our sales and money that we receive from datas. But sometimes the monies are the value is immaterial and we will put it into the petty cash. The petty cash generalists compound on a monthly basis the totals of the petty cash journal or California the general ledger. The particulars journals consists of petty cash receipts journal for monies received and petty cash payment journal for money paid out. So every receipt journal and I will have a payment journal and if I needed to, I will get a title that will be equal to the money in my petty cash.

The petty cash is funded with a bank cheque and accounted for in the petty cash procedure. So when I started my business, I will issue cash cheque and I will put the cash into my petty cash now Let's have a look at the example. Cash check 2000 issued on the second cash at the bank and the money put into the petty cash. Now we can see that we have a petty cash receipt journal. So the first one is a petty cash receipt one transaction one. It's money that we received from the bank.

The reference is checked to 2000 in total, and we will put it in the bank column because we received it from the bank 2000. Now we haven't taken VAT into account in this example. Then the second transaction petty cash voucher one is issued on the second for consumables that was bought from the supermarket and that's not a receipt that's a payment so we will cancel in the payment journal. Three was a payment for was a payment The first transaction but the cash receipt is issued on the 17th for 36 that was received from the data in my in so on the 17th in my in reference number received 231 or two six, and we put it in the Status column six and seven are transactions that we will account for in the time in general. So now we title the total amount that we received or 386 and receive 2000 from the bank and one or two six from data.

First one bank now, if we receive money from the bank, we can't allocate that to the bank account. We have a bank petty cash control account. So you need to account for it in the now I will explain it later on. But it cash control. So, we know that petty cash is an asset, when we received the money the asset became more plus and we will have to debit the petty cash. So, petty cash was the ball is an asset the asset became more plus.

And if an asset becomes more, we need to debit three zero to six then we receive from a data data as an asset, the asset became less cause you just lose money now, if an asset becomes less we need to create it. One zero to six and then the bank 30 cash control account now there is not an asset, liability equity income or expense account. That's a control account. So you just need to know if i debit my petty cash account then I need to go credit this account 2018 so you created that account, add up the debits After credits in the petty cash payment journal now we accounted for transaction one and we accounted for transaction five. That was receipts. So the petty cash payment journal.

Let's have a look at the second transaction. petty cash voucher one is issued on the second for consumables that was bought from the supermarket 1140. Today on the second both from the supermarket reference number that was the petty cash voucher that will live in 400 consumables in the consumable column 1140. Then transaction three petty cash Ratatouille is issued for stashing that was bought from pins and pencils on the second 457 on the second pins and pencils. That's a 257 and stationery column 36 transaction for petty cash for two 350 years is issued for payment of a temporary worker on the 15th. temporary worker first year and the wage column first year and and we haven't accounted for that in this example.

But if it was a bad column and the example stipulated that we need to take that into account, we would have added a bad column here and we would have put development in that column. Then transaction six petty cash transfer force issued for seven that was taken out of the petty cash and deposited into the bank account. On the 25th Bank, similar dread and as you can see, we don't have a bank petty cash control again, so we will put it into the salary column 700, rent, salary 700 grand and the last transaction petty cash route 541 force issued for the payment of a creditor on the 31st 31st, the L five, title 114. In insecurity that we spied 114 and then we need to title the columns that will add as columns. And we will total all of these columns will add them up and we will see they are equal to that column and then we need to prepare the general ledger consumables and expense expenses became more Plus, if an expense becomes more we need to debit elimination 40 then, stationery stationery expense expense became more plus debit 57 grand then wages expense expense becomes more we need to debit 50 rent, then then credit this one for now, that's the creditor that we fight liability liability became less a liability becomes less we need to debit 114 then then we have sundry 700 and that was for bank that's the money that we took out of the petty cash and we painted.

So we will take it to the bank petty cash control. Now we need to know that petty cash is an asset. And when we do payments, the asset reduces the asset reduce it we need to treat it so there Kathy, but it gets banked in we will debit with 700, drained capital and then the petty cash 932 50 cash is an asset As a reduced credit, so we're going to credit that account nine three to 40. add up to David's nine three to 14. add up the credits nine three to 14 and in we need to copy and paste into the general ledger. First of all, our receipt journal bank petty cash control 2000 Bank predicted petty cash control 2000. debtors control 12610 to six and petty cash three zero to six, petty cash three to six. David three zero to six credits three zero to six in the payment journal copy and paste consumables 1140 stationary 57 so salaries for creditors control 11414 then bank petty cash control 700 700 day and the petty cash no entry to petty cash nine three to 14 and we have copy and paste the general journal into the general ledger.

And then we need to fill in cash receipt journal to transfer the receipt of the that we received from the data into the data's ledger. So 1026 receipt from Emma into Emma in was a data that is an asset as introduced. If an asset becomes less we need to create it. So we put in Free Cash 1026 we account for that. In the petty cash payment journal we might apply menti Wi l 4114. Wi l is a liability.

We bite the creditors and now we are in Leishman liability reduced. If a liability becomes less we need to debit petty cash 114. So if we have a look at the accounting cycle now you can see that we accounted for the petty cash in the clickers journal, we receive the payment journal, we transfer the totals to the general ledger. We accounted for the datas receipt in the data's ledger. And we accounted for the creditors payment in the creditors ledger. And then there's one more thing that we need to have a look at that is transactions between the bank and the petty cash If I might get a check to the value of 2008 for cash and I got to the bank and I cashed the check and again put the money into the petty cash then my particular cash will receive 2000 and my bank balance will reduce with this as mean.

Now in my cash book payment journal, opening a that 2000 check was issued to the petty cash and in my petty cash receipt journal, I will account for the 2000 rent that I receive. Now, in the petty cash payment journal, the petty cash is an asset it will become more Plus, if an asset becomes more we need to debit worth 2000 and bank is an acid and when I cashed the check the Balance reduced minus we need to create a 2000 and we account for it so the petty cash 2000 debit and the bank 2000 credit so our received the money into the petty cash receipt journal and accounted for in the petty cash and I can't afford any bank account but now my cash book time in general a receipt or payment of 2000 towards the petty cash. So my petty cash is an asset it became more plus need to debit 2008 and bank some acid reduced minus created 2000 and if I copy and paste the journal into my general ledger you can see petty cash 2000 debit and bank 2000 rent credit The total is 4000.

The total is 4000. So you can see I made out a check for 2000. And now actually duplicated the entry because in my three cash I have 4000 right now, and my bank balance reduced to 4000. That's not correct. So we can't take the transaction to the very cash into the bank from the free cash receipt journal. And from the cash book payment journal, we can't account for it in the bank and the petty cash then we are going to duplicate that transaction.

There's only one way to account for it. What you need to do is in your petty cash receipt journal, you're going to account for 2020 jerseys from the bank account. So your petty cash is an asset, it became more plus to debit the petty cash for 2000. And then we are going to have a account bank and villagers control account. So we take the bank 30 cash control account. It's not an asset liability income or expense, you just need to know that if I did the pedicures then I need to create it the second 2000 and I copy and paste petty cash 2008 and petty cash bank control account 2000.

And in my cash book payment journal, I will cancel the check that I mighta bank bank is an asset the acid introduced, created 2000 and the best For the cache control account, and I need to know if I created my bank account and I need to debit this account 2000 and the United copy and paste, bank 2008 and the petty cash bank control account 2008. Now, you can see that my bank reduced with 2000 and I have 2000 in my very cash and in this bank, petty cash control account 2000 debit 2000 period. So the balances zero and that is how we account for transactions between the bank and the petty cash. Now, in the next session, we will deal with the bank, the cash book and the bank reconciliation. So you need to go to the manual and go and do some of the examples for the sales purchases and petty cash and make sure that you understand To account for that, and that you transfer the sales summary the status to the general ledger, and the data's ledger, how to account for purchases in the purchase journal and transfer the totals to the general ledger and the creditors ledger.

And that you have to verticals journals, the receipt journal and the payment journal. And that cannot account for transactions between the bank and the petty cash. In the next session, we will deal with the cash book and the bank reconciliation. See in the next session.