Complete the cash account using the following transactions. Enter the transactions as they occur. Minizone sells miniature guitars for babies. It is a start-up company that receives support from the Local Enterprise Office.
Details
1/6/23 Balance brought forward from previous month: €15,000
15/6/23 Sales €5,000
07/6/23 Purchases €4,500
18/6/23 Wages €3,500
Debit or credit?
Debit Debit Credit Explanation
Cash left over from the previous period. Usually on the first date of the month and called ‘balance b/d’.
Sales are the money value of the goods/services sold by the business.
Purchases are the money value of the goods/ services bought by the business to resell or raw materials to make products to sell.
Credit Wages are paid to the employee by the business.
There are many other examples of credit entries.
Solution: Debit In
Date 2023
1/6 15/6 Details
Balance Sales
Cash Account of Minizone €
Date 2023
15,000 7/6 Credit Out Details Purchases 5,000 18/6 Wages
Total €
4,500 3,500
Balancing an account shows the money left at the end of the period (if any). This is called ‘balance b/d’. There are a few steps in balancing an account.
Know It!
1. Is it cash in? Yes (Debit) 2. Is it cash out? Yes (Credit)