Solicitors' Accounts
Account for receipt of the deposit from the buyer pending exchange: - ANSWER CR client
ledger: buyer client
DR client cash
Account for the payment of the deposit to the seller's solicitors: - ANSWER DR client ledger:
buyer client
CR client cash
Accounting for a VAT invoice: - ANSWER DR office ledger with the VAT payable on the
profits costs
CR VAT account with the VAT
Accounting for an abatement of costs: - ANSWER CR office ledger for the client with the
abatement (excluding VAT)
DR profit costs with the abatement of costs (excluding VAT)
CR office ledger for the client with the VAT on the abatement
DR VAT account with the VAT on the abatement
Accounting for costs charged to a bank where there is a separate ledger for the lender: -
ANSWER The profit costs are recorded in the office ledgers for each client in the usual way.
Then, it is necessary to transfer the costs from the lender's office ledger to the buyer/seller's office
ledger, and then transfer the money from the buyer/seller's client ledger to its office ledger in order
to pay both invoices.
Accounting for costs charged to a bank where there is no separate ledger for the lender: -
ANSWER Profit costs recorded in the buyer/seller client's office ledger
Accounting for deposit payment to the client (agent transaction): - ANSWER DR client
ledger: seller client
CR client cash
Accounting for deposit transferral upon completion of sale (stakeholder transaction): -
ANSWER DR client ledger: stakeholder
CR client ledger: seller client
Accounting for interest paid on money held in a general client account: - ANSWER CR
interest received ledger
DR office cash
DR interest paid ledger
CR office cash
, Solicitors' Accounts
CR client ledger of the client who is being paid the interest
DR client cash
Accounting for method 1 for mortgage funds (in buyer/borrower client ledger): -
ANSWER CR client ledger for the buyer/borrower
DR client cash
Accounting for method 2 for mortgage funds (separate ledger for lender) - ANSWER CR
client ledger for the lender
DR client cash
DR client ledger for the lender
CR client ledger for the client/burrower
Accounting for putting money into the separate designated client account: - ANSWER CR
separate designated client ledger
DR separate designated client cash
Accounting for receipt of deposit cheque at exchange of contracts (agent transaction): -
ANSWER CR client ledger: seller client
DR client cash
Accounting for receipt of the deposit cheque at exchange of contracts (stakeholder transaction): -
ANSWER CR client ledger: stakeholder
DR client cash
Accounting for taking money out of the general client account (for a separate designated client
account): - ANSWER DR client ledger
CR client cash
Accounting for VAT on bad debts - ANSWER CR office ledger for the client, with the amount
of the unpaid debt (excluding the VAT amount)
DR bad and doubtful debts account
CR office ledger for the client, with the amount of VAT in respect of the unpaid debt
DR VAT account
Accounting for VAT where the solicitor is acting as agent: - ANSWER The solicitor should not
account for the VAT separately, just the VAT-inclusive amount of the payment, and it should be made
out of client money where possible. Should make a note in the details column that VAT has been
included.
Accounting for VAT where the solicitor is acting as principal: - ANSWER CR office cash with
the net amount of the invoice
Account for receipt of the deposit from the buyer pending exchange: - ANSWER CR client
ledger: buyer client
DR client cash
Account for the payment of the deposit to the seller's solicitors: - ANSWER DR client ledger:
buyer client
CR client cash
Accounting for a VAT invoice: - ANSWER DR office ledger with the VAT payable on the
profits costs
CR VAT account with the VAT
Accounting for an abatement of costs: - ANSWER CR office ledger for the client with the
abatement (excluding VAT)
DR profit costs with the abatement of costs (excluding VAT)
CR office ledger for the client with the VAT on the abatement
DR VAT account with the VAT on the abatement
Accounting for costs charged to a bank where there is a separate ledger for the lender: -
ANSWER The profit costs are recorded in the office ledgers for each client in the usual way.
Then, it is necessary to transfer the costs from the lender's office ledger to the buyer/seller's office
ledger, and then transfer the money from the buyer/seller's client ledger to its office ledger in order
to pay both invoices.
Accounting for costs charged to a bank where there is no separate ledger for the lender: -
ANSWER Profit costs recorded in the buyer/seller client's office ledger
Accounting for deposit payment to the client (agent transaction): - ANSWER DR client
ledger: seller client
CR client cash
Accounting for deposit transferral upon completion of sale (stakeholder transaction): -
ANSWER DR client ledger: stakeholder
CR client ledger: seller client
Accounting for interest paid on money held in a general client account: - ANSWER CR
interest received ledger
DR office cash
DR interest paid ledger
CR office cash
, Solicitors' Accounts
CR client ledger of the client who is being paid the interest
DR client cash
Accounting for method 1 for mortgage funds (in buyer/borrower client ledger): -
ANSWER CR client ledger for the buyer/borrower
DR client cash
Accounting for method 2 for mortgage funds (separate ledger for lender) - ANSWER CR
client ledger for the lender
DR client cash
DR client ledger for the lender
CR client ledger for the client/burrower
Accounting for putting money into the separate designated client account: - ANSWER CR
separate designated client ledger
DR separate designated client cash
Accounting for receipt of deposit cheque at exchange of contracts (agent transaction): -
ANSWER CR client ledger: seller client
DR client cash
Accounting for receipt of the deposit cheque at exchange of contracts (stakeholder transaction): -
ANSWER CR client ledger: stakeholder
DR client cash
Accounting for taking money out of the general client account (for a separate designated client
account): - ANSWER DR client ledger
CR client cash
Accounting for VAT on bad debts - ANSWER CR office ledger for the client, with the amount
of the unpaid debt (excluding the VAT amount)
DR bad and doubtful debts account
CR office ledger for the client, with the amount of VAT in respect of the unpaid debt
DR VAT account
Accounting for VAT where the solicitor is acting as agent: - ANSWER The solicitor should not
account for the VAT separately, just the VAT-inclusive amount of the payment, and it should be made
out of client money where possible. Should make a note in the details column that VAT has been
included.
Accounting for VAT where the solicitor is acting as principal: - ANSWER CR office cash with
the net amount of the invoice
