I've recently offered to help a friend with their book keeping but the accounts are in a total pickle.
There are a lot of invoices going back as far as 2008 which I assume have been paid by cash as they don't appear on either the bank or credit card statements.
Would I write these off with a manual credit note? If so, what nominal code would I use, I'm guessing it wouldn't be the same as the invoice because this would then give a false balance on the nominal code, so do I create a "write off" nominal code?
Alternatively (and I apologise if this is a stupid question!!) if I show it as being paid by cash, how do I record the cash to replenish the cash account (as the current balance on the cash account wouldn't be sufficient to cover these invoices), would I just record it as a capital amount being put in?
I think you need to find out exactly how these invoices were paid and if they actually relate to the current business and were they claimed as legitimate expenses in tax yr 2008/2009. If they were paid cash but not through the businesses petty cash ie they were paid for the business by the friend they would be treated as capital introduced into the business.
I am assuming they have not prepared tax returns for 2008/09 if they have not entered this info. There would be no point in recording it otherwise (unless it was wrong).
The expenses should be recorded as normal, assuming they are legitimate expenses. Payment method is assumed to be cash. Any cash difference can then be journalled, as you say to capital introduced (or DLA if a company).
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