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Post Info TOPIC: Cash banked into personal account


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Cash banked into personal account
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Hi,

I prepare a monthly profit and loss for a small business (sole trader).  The owner banks some cash into their personal bank account and I only see cash going into the business bank account - how should I account for this?

Thanks



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Post it to their drawings.

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Sue
Assist Office Services - Bradford Bookkeeper


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It's probably worth having a word with them too if they are the same sole trader buying things from their personal account. Tell them it's cleaner if they use their business account. Possibly their bank charge them for use of their business account and thats why they're doing it, but it's not good practice.

Kris

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Thanks, I've just started doing the books for this sole trader.  For the first year - no records were kept, should I be asking to see the personal bank statements, so that I can include the cash banked amounts onto sales and off expenses (drawings)?



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Hi Kate,

I think my response over on your other post answers this one.

Just thinking that for anyone else reading this the two threads are pretty intertwined so also refer to :

http://www.book-keepers.org.uk/t45455219/expenses-paid-by-personal-account/

Short answer though is that in this instance you need to also be reviewing movements in the clients personal accounts in order to build a full(er) picture of the business affairs for the period.

kind regards,

Shaun.

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Shaun

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Hi Kate,
If no records kept, and you know that money is banked into a personal account, then I would ask to see the personal statements like Shaun states, so that you can see the bigger picture. It will help you to produce a cash control account. If you know what was banked and what cash expenses were paid (may have to ask for estimates) then it would give you an indication of what the cash income is for the business.

What type of business does the sole trader have?
Is it mainly a cash business, or do his customers pay by card etc?

When producing the accounts, you would dr drawings with the cash banked into the personal account and cr cash account.

Regards
Gill

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Gill



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Hi Gill,

Thanks for your reply.  The sole trader is a beauty therapist and it is roughly 50% cash sales and 50% card sales. 

There are approx. 30 transactions per month, is it necessary to do double entry for this amount of transactions?  There are no receivables and only 1 creditor and I'm only producing a profit and loss, not a balance sheet...

At present I'm just doing - Sales less business Expenses less Drawings equals Profit/Loss...

 



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Hi Kate,

How does your client record their sales? If the only way to prove their income is by looking at the personal account, then I'd say it was necessary.

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Tony

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