How do I make a journal for an opening balance of accrued income? this is income not invoiced yet.
I have already done the accounts before entering the opening balances, so there will now be a customer invoice for this accured income amount. How do I deal with this please?
Thanks in advance
I don't know what's wrong with me tonight I can't work out ANYTHING
Right accruals - a debit figure on the last years balance sheet of £2,055 of accrued income.
So I had a list of the customers and the accrued income, which I entered as a journal like this
DR: customers account
CR: Opening balances contra (which zeroed out when all o/b journals were entered)
I can't think straight, these weren't actually debtors were they? it was just un-invoiced work! but I don't know where else to put it.
I actually logged the whole of the 2013/14 accounts in before entering the opening balances as I was waiting for the previous accountant to send me the details. So now I have entered the sales invoices to which these accrued income relates too.
Before I go an make a massive mess I want to check if 1. I have put the 'accrued, un-invoiced work' in the right place on the journal and 2. What entry I need to make to get the balance of the journals out of the customers account.
Thanks in advance for any help on this
Rachel
-- Edited by rachel_mclean on Tuesday 6th of January 2015 10:07:05 PM
I think, in effect, you've ended up doing the equivalent of Dr Debtors, Cr Some income code (ending up in retained earnings) in 2013-14 for work that had not yet been invoiced. I think it might have been better to process the debit to an Accrued Income code rather than Debtors (normally reserved for invoiced amounts). No matter, it should be easy to fix if that is what happened.
I think your biggest problem is that I don't think you can process journals to Debtors that include the customer identifier (that only happens in the special case of posting opening balances). What you need to do is reverse the original SI Debtor amounts out and record the Dr amounts to an Accrued Income balance sheet code. If you delete the original Opening balance transactions in file maintenance you'll then be free to Dr Accrued Income and Cr 9998 in 2013-14 - keeping the opening balance sheet in balance
In 2014-15, you'll need to reverse the effect of the original entries because you've raised the actual invoices as Dr Debtors Cr Some income code in 2014-15 (that's when you entered the sales invoices, isn't it?). I think your entries would be Cr Accrued Income Dr Some income code in 2014-15 to cancel the journals done in 2013-14.
I hope this helps.
Regards,
P.S. Original response heavily edited because of a misunderstanding on my part.
-- Edited by Onion4Sage on Tuesday 6th of January 2015 10:26:24 PM
I am using VT and there doesn't seem to be an account ANYWHERE for 'accrued income'. It's really easy to delete and re-do the journals in VT without making a mess. But the problem is I still don't understand the journals that I should of made as opening balances at 31st March 2013.
Thank you for your help though, I just don't understand what you mean
sorry for the delay, was sorting out a client on the phone.
It seems that you are inputting the Accrued Income correctly with the accrued incme belonging with the customers to which it relates. And as you identify these are debtors in that they owe money to the business.
I am assuming that all of your opening balance contra's are dated the day before the start of the year that you are now processing and from them you can create a set of accounts identical (#1) to the one actually produced in that year. If not then there is something wrong.
kind regards,
Shaun.
#1 there are minor differences between accounts produced in Sage or IRIS compared to VT especially around things like the breakdown of fixed assets but overall you should be able to relate them exactly.... Its easier with VT Accounts than VT transaction+ to compare directly but regardless it shouldn't give you any major headaches.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I've just seen you post and I can see I was completely wrong in assuming you were using Sage - sorry.
Often prepayments and accrued income are grouped together, so you could either create a new account next to prepayments or, maybe, re-name the prepayments account to incorporate accrued income. Cr Debtors Dr Prepayments / Accrued Income on 31 March 2013 to get the opening balance sheet sitting correctly.
In 2013-14 you need to cancel the accrued income entries when you raise the actual invoices (your invoices will be Dr Debtors Cr Some income code). I think your entries would be Cr Prepayments / Accrued Income Dr Some income code in 2013-14.
The net effect for 2013-14 will be: Dr Debtors £2,055 Dr Some income code £NIL (2055-2055) Cr Prepayments / Accrued Income £2,055
In other words, the income was recorded in the year ended 31 March 2013, all that happens in 2013-14 is that the asset moves from being Accrued Income to being a Trade Debtor.
I hope this makes more sense.
Regards,
P.S. Crossed with Shaun's post.
-- Edited by Onion4Sage on Wednesday 7th of January 2015 12:06:41 AM
there will be nothing to cancel and no new accounts to make.
the outstanding customers will be recognised as accruals in the last period, as payments come in during the current period they simply stop being accruals.
Its quite different to Sage. personally I find it a lot more logical when there is non of this closing periods off and opening new periods with journaled reversals.
I think that it does take a while for Sage people to adjust to VT but once they have they don't generally want to go back.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
think that we must be at cross purposes somewhere.
I'll explain how I see things to see if we can spot where we're parting ways with our understanding.
In the normal course of events there would be a sales invoice and income double entry
Dr Customer Account
Cr Income
As payments come in we
Dr Bank
Cr Customer account
At the period end any customer account that remains with a balance is automatically a Trade Debtor in the balance sheet (and their associated income is recognised in the P&L following standards accruals principle of income being recognised when earned not when receieved).
The only difference here that Rachel has is that the balences to be brought forwards are being set up as opening balances rather than there being a complete history in VT so the entries on the day before the start of the current period for each customer account with an outstanding balance will be
Dr Customer
Cr Opening balance Contra
Cr Income
Dr Opening Balance Contra
And then things simply continue as normal with payments coming in adjusting the customer balances which will automatically be reflected in the trade debtors figure.
The diffeerence I feel in our approaches is that via VT I would consider Accrued Income as a trade debtor in the accounts where through Sage from what you say it would actually show as accrued Income.
In VT accounts you cound go into the specific template and change the name if you wanted (would affect all subsequent trades of that type or you could set up a new template based on an existing one) but personally I prefer to think of them in terms of trade debtors.
Note that the latter part of this note is referring to VT Accounts rather than VT Transaction+ which has a much more basic B/S and P&L.
Hope that the above makes sense,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I don't take issue with any of what you say. I think it is just in our understanding of what Rachel has processed that we differ.
I thought Rachel said that, as well as processing the opening balances (based on Accrued Income information), she had, in addition, processed invoices for the income that had already been accrued too. If that is the case, then I think your way of processing this would require a Dr Income Cr Customer, for the amount previously accrued, to avoid having both uninvoiced and invoiced amounts appearing as due from the Customer.
Ah, (penny drops) I think that we were at cross purposes in our explanations.
But does that not raise the question how the amounts were included against income in the prior period without an invoice? The only explanation to my mind is where an accrual (trade debtor) override based on estimates has been put through pre period end (is that what we are talking about here Rachel?)
In which case when the real invoices are raised they should be created in the prior period (the period to which they relate) and the estimate deleted rather than messing around attempting to adjust the errors out of the estimate. (so the estimated figures are effectively replaced by the real ones).
I think hat might be another case of different mindset approaches to the software as Sage would have needed to close that period off to move forwards where with VT all periods remain open which handles situations such as that scenario quite neatly.
The complication on the above would be invoices covering a period that crosses a year end (service invoices, construction contracts, etc.) in which case my approach would be to create two invoices which relate the correct amounts to the correct periods.
Hope that makes sense,
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
