Just wanted to know how this would be recorded from a manual and computerised point of view. I am working with a spreadsheet at the moment and I'm unsure whether to record this as a bank payment or a cash payment. I suppose if the paypal account is connected to the bank account then funds will be paid into paypal from the bank?
I don't think there's a right or wrong answer and I'd look at the volume of transactions. If they're few and far between I'd post the payments via petty cash.
If they're more frequent then I'd open a dedicated bank account. Especially if the client received money into a paypal account as well as paying money out form it.
-- Edited by ADAS on Sunday 2nd of October 2011 05:04:19 PM
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Tony
Responses are intended as outline only. Formal advice should be sort from your Institutes Technical Department or a suitably qualified Accountant.
Thanks Tony. They are quite frequent and large sums sometimes for storage units, fencing, board signs etc.
The last company I worked for, which is where I gained my Bookkeeping experience, didn't have petty cash so I'm unsure how I would incorporate this into my spreadsheet. Would it be just a simple column for petty cash or would I have to do the whole petty cash procedure?
As I understand it, a Paypal account should be treated like a bank account just the same as bank, cash and petty-cash would be. If your making a paypal payment funded by direct debit then creating a Journal transfer from bank a/c to paypal a/c would cover it, referencing the paypal transaction number and printing off a receipt for each one.
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Just to echo what others have said, I always treat Paypal in the same way as any other bank account. any money that moves between Paypal and another bank account just show as a transfer.
