Summary BPP Solicitor's Accounts - FULL CHEAT SHEET - Exam-Friendly - High Distinction

Solicitors’ Accounts Entry Breakdown

General Entries

Pay money into the client account CR client ledger: [client name] [amount]
DR client cash [amount]
Pay money out of the client account DR client ledger: [client name] [amount]
(e.g. for disbursements) CR client cash
Record a bill of costs DR office ledger: [client name] [amount]
CR profit costs [amount]
Transfer money from the firm’s client account to the Transaction 1
firm’s office account (e.g. to settle a bill of costs) DR client ledger: [client name] [amount]
CR client cash [amount]
Transaction 2
CR office ledger: [client name] [amount]
DR office cash [amount]
Pay disbursements out of the office account DR office ledger: [client name] [amount]
CR office cash [amount]
Paying out of petty cash DR office ledger: [client name] [amount]
CR petty cash [amount]

Property Transactions

Receipt of deposit from buyer client pending CR client ledger: [client name] [amount]
exchange DR client cash [amount]
Paying of deposit from buyer client to seller’s DR client ledger: [client name] [amount]
solicitors DR client cash [amount]
If the seller’s solicitor is acting as stakeholder
(holding deposit on trust)
Receipt of deposit at exchange of contracts CR client ledger: stakeholder [amount]
DR client cash [amount]

Record transfer of deposit at completion DR client ledger: stakeholder [amount]
CR client ledger: [seller client name] [amount]
If the solicitor is acting as agent
Receipt of deposit cheque following exchange CR client ledger: [seller client name] [amount]
DR client cash [amount]

Payment of deposit cheque to seller client DR client ledger: [seller client name] [amount]
CR client cash [amount]
Record mortgage advance under method 1 (where CR client ledger: [buyer client name] [amount]
there isn’t a separate ledger for the lender) DR client cash [amount]
Record mortgage advance under method 2 (where CR client ledger: [lender name] [amount]
there is a separate ledger for the lender) DR client cash [amount]

On completion, transfer the funds from the lender DR client ledger: [lender name] [amount]
client to the buyer client CR client ledger: [buyer client name] [amount]
Record costs charged to a bank under method 1 DR office ledger: [client name] [amount]
CR profit costs [amount]
Record costs charged to a bank under method 2 Transaction 1- record profit costs in the usual way
DR office ledger: [client name] [amount]
CR profit costs [amount]
Transaction 2- transfer costs from the lender to
client to show client has to pay
DR office ledger: [buyer client name] [amount]
CR office ledger: [lender client name] [amount]

, Transaction 3- transfer money from client ledger to
office ledger to pay both invoices
DR client ledger: [buyer client name] [amount]
CR client cash [amount]
DR office ledger: [buyer client name] [amount]
DR office cash [amount]
Mortgage redemption under method 1 DR client ledger: [seller client name] [amount]
CR client cash [amount]
Mortgage redemption under method 2 Transaction 1- client to lender transfer of
redemption figure
DR client ledger: [seller client name] [amount]
CR client ledger: [bank client name] [amount]
Transaction 2- record payment to lender client
DR client ledger: [bank client name] [amount]
CR client cash [amount]

Accounting for VAT, abatement of costs and bad debts

Accounting for VAT on profit costs Transaction 1- record the amount of profit costs
DR office ledger: [client name] [amount exc VAT]
CR profit costs [amount exc VAT]
Transaction 2- record the amount of VAT
DR office ledger: [client name] [amount of VAT]
CR VAT account [amount of VAT]
Accounting for an abatements of costs Transaction 1- record the reduction in profit costs
CR office ledger: [client name] [amount of reduction
exc VAT]
DR profit costs [amount of reduction exc VAT]
Transaction 2- record reduction in VAT
CR office ledger: [client name] [amount of VAT on
reduction]
DR VAT account [amount of VAT on reduction]
Accounting for VAT where the solicitor is acting as Transaction 1- record the payment of the invoice
principal (i.e. supply to the solicitor) CR office cash [amount of invoice]
DR office ledger: [client name] [amount of invoice]
[VAT to recover later]

Transaction 2- record payment of VAT on the invoice
DR VAT account [amount of VAT]
CR office cash [amount of VAT]

Transaction 1
When the solicitor subsequently invoices the client
DR office ledger: [client name] [amount of profit costs
for its profit costs
exc VAT]
CR profit costs [amount of profit costs exc VAT]
Transaction 2
DR office ledger: [client name] [amount of VAT on
profit costs and VAT on costs incurred]
CR VAT account [amount of VAT on profit costs and
VAT on costs incurred]
Accounting for VAT where the solicitor is acting as DR client ledger: [client name] [amount of invoice
agent (i.e. paying for ease) plus VAT]
CR client cash [amount of invoice plus VAT]

If there isn’t enough money for this to be paid out DR office ledger: [client name] [amount of invoice
of client cash, pay out of office account plus VAT]