Hello - I'm looking for help to overcome a brain drain... My new client is a trainer, she bills the companies she works for as part fee and part expenses which she has already paid out. Do I account for this as follows:
Expenses paid out: DR Expense accounts CR Bank/ cash book
For each invoice sent: DR Client account - total amount payable CR Sales with fee only (income) CR Recoverable expenses with the expenses owing (other income)
and then when invoice paid: DR Bank CR Client account with full amount
This seems to balance but I'm not convinced! Thanks in advance!
Your double entry seems fine, although when I account for the reimbursed expenses I normally credit a sales account as opposed to trying to contra them against the expenses originally incurred. For example I do some work for a consultant and when he recharges the expenses to his client I send all of the receipt to consultancy income. The reason for this is that he's VAT registered and therefore gross's up the expense, meaning that the reimbursed amount is never equal to the original receipt. I find doing it this way keeps the P&L cleaner.
-- Edited by Dustin57 at 13:18, 2008-07-21
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