Im just starting out as a bookkeeper and trying to get answers to all questions at the mo..i do apologise if this sounds dumb!
I'm wanting to know: if a commercial business card is used for business purchases, how do i show this up? So far most purchases are being made through the business bank account so show up on the bank statement.. but obviously when the commercial card has been used, it doesnt show up on the business bank account statement. How do i get round this?..as receipts for all business purchases can be shown but the amounts won't balance if some have been paid for with the commercial card. Do i total the amount spent on the commercial card (balanced with receipts) and include this as an extra income?
Do you mean a business credit card? If so set up the card as a bank account, in Sage this is nominal code 1240. Post the purchases made with the card to this account. Then when the credit card is paid through the bank account do a transfer from the bank account to the credit card account i.e debit credit card acc, credit bank account.
Any business purchases paid by the Commercial business card are a business expense if they relate to the business. Have a look at the Commercial Card Business statements and see which are business expenses. As an example A materials purchase may have been made therefore analyse such items remembering to deduct the vat element if your client is VAT REGISTERED. Any non Business reciepts post in total to drawings. Of course if is is a Limited Company and not a sole trader or partnership then post items relating to the directors of a private nature non business to a DIRECTORS LOAN ACCOUNT. I hope this helps a little.
Yes this was helpful as this is the way i would have done it but needed to make sure it was right. Only thing i'm not sure of is in the I&E report, do i not need to add the amout spent on the commercial (credit) card as an income to balance it out?
As David said everything relating to the business that is paid for on the business card is an expense. You would analize the receipts and post the to the correct expense accout e.g goods for resale, stationery etc. There is no income involved.
The bank accounts are not shown on the income/expense they are shown on the balance sheet hence if money was still outstanding to the card it would be shown as current liability on the balance sheet.
