Hi all, I wondered if someone could help me with a posting issue I have. I work for a small business, all sales are cash ie non account and there are about 100 transactions a month. My problem is this:
1. Any cash payments are kept by my boss and not banked, which he can do obviously as a sole trader as they are all invoiced, VAT paid etc.
2. He has a loan with a company that collect their money back by taking 10% of all credit card payments daily.
Due to the high volume of sales I thought it would be a good idea to have a Sales Day Book then obviously Credit Sales and Vat a/c's and Debit Bank, but the loan and cash deductions confuse matters slightly.
The only way I can see to make the accounts balance correctly is to Credit Sales and Vat with the correct sums in the Sales Day Book, and them Debit the loan a/c, Bank and Drawings with the sums they each received for the month which combined balances the two Credit entries. It doesnt seem ideal as I am not putting in daily figures for the loan repayments or the bank deposits but I cant see how else I can do it. I would also have to put Sales Day Book as the entry in each a/c.
I hope that someone more qualified will be along in a while to answer your query, but, provisionally, the way I would do it would be to treat the three processes separately.
It's more work when entering transactions but easier to untangle if problems arise.
So I would suggest
1) For the sales, debit cash/bank & credit sales plus VAT - as for any business registered for VAT.
2) For the cash payments kept by your boss, debit drawings & credit cash
3) For the repayment of the loan, debit the liability to the lender, credit the credit card account.
I would have separate bank and cash accounts since money coming in via debit/credit cards and via cash are dealt with separately. I always get rather mixed up with whether the term "cash" shoud be literally restricted to cash. There seems to be a difference between the UK and the US usage. But I suppose in the end each business can deal with them separately or together as is most convenient for that business.
-- Edited by chatcat on Friday 23rd of March 2012 01:41:40 PM
-- Edited by chatcat on Friday 23rd of March 2012 02:07:01 PM
