B1: 5.06 Posting Cash Book Payments to the General Ledger

Posting Cash Book Payments when the Cash Book is not used as part of the double-entry system

When posting the payments side of the Cash Book to the General Ledger we will post the columns totals as follows:

Credits

  • The total of the Cash column will be posted to to the credit side of the Cash Account in the General Ledger
  • The total of the Bank column will be posted to the credit side of the Bank Account in the General Ledger

[NB. These columns are credits as they record decreases in the value of the business’ assets; i.e. the amount of cash held, or the amount of money held at the bank]

Debits

  • Debit the totals of each of the columns that describe what the payments of money were for to appropriate account in the General Ledger; e.g.
    • The total of the VAT column will be posted to the debit side of the VAT Account
    • The total of the Cash Purchases column will be posted to the debit side of the Purchases Account (alternatively, some businesses use a Cash Purchases Account for these types of sales)
    • The total of the Purchases Ledger column (also know as the Trade Payables column) will be posted to the debit side of the Purchases Ledger Control Account; and so on
    • The one exception to the above is where an “Other” column is used to record any unusual or one-off type of payment. Where this is the case we can either post the total to the debit side of an Other Payments Account or alternatively, we will debit the individual payments recorded in this column to appropriate accounts in the General Ledger (as illustrated below)

[NB. These columns are debits as they represent decreases in the values of liabilities; e.g. amounts payable to HMRC and to suppliers, and increases in the values of expenses; e.g. purchases]

Illustration 1

The payments side of a business’ Cash Book for March is shown below. The figures that will be posted to the General Ledger are highlighted in yellow. These are the totals of each column except for the Other column where we will post each individual entry to the General Ledger.

The list of postings for the above Cash Book Payments to the General Ledger is as follows:

Note that the individual entries in the Other column have been posted to a Bank Charges Account and to an Equipment Account in the General Ledger

Recording the postings in the General Ledger accounts

When recording the above postings in the General Ledger accounts we will record the period end date next to each transaction together with the description “Cash Book”.

Posting Cash Book Payments when the Cash Book is used as part of the double-entry system

Where the Cash Book includes the bank and/or cash balances, we do not post anything to a Bank Account or a Cash Account in the General ledger as these two accounts will not exist.

Illustration 2

The payments side of the Cash Book for March is shown below. The balances at the end of the month are included in the Cash Book and are highlighted in blue. The amounts to be posted to the General Ledger are highlighted in yellow.

The list of postings for the above Cash Book Payments would be as follows:

The above postings will then appear in the General Ledger accounts as shown below: