I'm probably being really dumb with this question but, I have an invoice for £113.50 which was paid for in cash with £120.00 change of £6.50 was given from our petty cash and the £120 was banked. With regards to book keeping how do I allocate the £6.50 a) in the petty cash and b) once I allocate the payment to the invoice? Can both just be put to the same nominal account?
-- Edited by darlby on Tuesday 5th of May 2015 10:56:17 AM
just put £6.50 overbanked back from the bank into petty cash and it all sorts itself out
Think about what has actually occured.
You have at present :
Dr bank 120.00
Cr Customer 113.50
Cr Petty Cash 6.50 (as if you had put 6.50 from petty cash into the bank)
So
Cr bank 6.50
Dr Petty cash 6.50
Sorted.
HTH,
Shaun.
p.s. nominal codes are just a software specific thing and nothing to do with bookkeeping itself. Always consider what you are attempting to do and make the software do it rather than considering things from the perspective of the software per se.
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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.
Always consider what you are attempting to do and make the software do it rather than considering things from the perspective of the software per se.
But the software you use does make a difference to how you do it. Back in the olden days when I used Sage, I'd have posted a Sales Receipt for £113.50, and journalled the £6.50, to make Sage put everything in the right place and get the tax codes right.
With VT, where you can mix what had to be done separately in Sage in one posting, it's pretty much like journalling all of it, and much more logical.
it's just my personal campaign to try and drive home that people here are professional bookkeepers and accountants, not simply data input clerks.
We know where on the financial statements an entry should apprear and we make our software do that.
Its great that Sage puts it in the right place but the principle should be that the software is doing what we want it to do rather than there being any element of surprise at where something appears but accepting it because the software says so.
I appreciate that not everyone will use VT but I feel that their mindset still needs to be firmly in manual double entry bookkeeping principles very much like when one does a sum on a calculator you know approximately the value that you are expecting before you read it on the calculator and if it isn't right then you know that you've gone wrong.
I think that one of the things that ICB have got right is to ensure that people are trained in manual bookkeeping before computerised.
People need to be in that mindset with their accounting software in that when they input something they should know approximately where it will appear and what affect it will have upon the accounts.
The key in your example was that you knew what you were looking for the software to achieve and you made the software do it (working around it's idiosyncracies). My arguement that I keep slipping into discussions (this is not something peculiar to this thread or any reflection on the original question) is that people must be of that mindset rather than the subtle difference of looking what the software wants without considering the actual effect on the final accounts.
Would there have been any issue in this scenario with the tax codes as that surely would only be on the original invoice of £113.50 regardless of the amount received / retransferred.
kind regards,
Shaun.
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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'd receive the money in the petty cash account £113.50 therefore paying off the invoice, then transfer the £120.00 to the bank account from petty cash. This leaves the petty cash account short by £6.50 which is correct. This is using Sage of course.
That would still be going through the same steps though Steve in that the Petty cash would for a while have a cheque rather than cash in it that you bank and would still need to refund the £6.50 to petty cash to restore the imprest balance to what it should be.
__________________
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.
People need to be in that mindset with their accounting software in that when they input something they should know approximately where it will appear and what affect it will have upon the accounts.
I agree, and think it's a great advantage that I started my accountancy training 41 years ago, when things were manual. But with the aid of those olde worlde accounting machines that operators in the machine room used to post everything to ledger cards, so we didn't have to use quill pens and huge hand written ledgers! I've always worked on the basis of knowing what outcome is needed, and then working out how to make the software achieve it. In the case of Sage, that sometimes meant that by the time Tech Support got back to me to say it couldn't be done, I'd already done it!
I would credit the bank with £113.50(i.e. pay the invoice) the remaining/overpay £6.50 where would I credit this too?
Also when I reconcile my petty cash I.....
Cr my bank with amount used.
DR my petty cash account with amount used.
CR my petty cash with amount used.
Dr individual amount's used to the different nominal accounts depending on what the cash has been used for ( which the 6.50 would be one of)
I'm confused on both sides where the £6.50's go, If I credit my petty cash when I allocate the overpay on sales invoices this will throw my petty cash out.
If theses were separate things I would CR/DR my miscellaneous account with them
That would still be going through the same steps though Steve in that the Petty cash would for a while have a cheque rather than cash in it that you bank and would still need to refund the £6.50 to petty cash to restore the imprest balance to what it should be.
hi Shaun
Sorry I wasn't knocking anyone's logic just saying how I would do it.
I find that working the way I learnt which was manual book keeping, doesn't always work with accounting systems or at least sage. You can see what you want to do, and know how to do it manually, but have to work round and about to get it there certainly with sage.
I would credit the bank with £113.50(i.e. pay the invoice) the remaining/overpay £6.50 where would I credit this too?"
Shaun answered that right at the start of this discussion - but to explain it in terms of Sage transactions, starting from basics:
You have an outstanding invoice on Sage for £113.50 for the customer - and they pay you £120 in cash (which is banked) and you give them £6.50 change (from petty cash) - so enter:
Customer receipt of £113.50 (going into the bank account)
A Bank transfer of £6.50 (going from petty cash to the bank account)
You now have the customer invoice showing as paid, the bank up by the £120 that has been paid in, and the petty cash down by the £6.50 you have given in change to the customer.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
I am just doing my ICB Level 3 Computerised and my training provider won't let me input a thing into Sage on the mock exams until - I have completely done it manually and had it signed off.
Also, out of interest I was using a computer at my local college doing some payroll revision for an exam (as I don't own Sage 50 Payroll) - during an IAB Level 2 Sage Computerised lesson (this is after Level 1 - so nearly 24 weeks in (part time) and I heard a student ask the lecturer - what a journal is ?)
as I said above, the ICB's approach of making students do manual before computerised is one of the things that I agree with them on.
it all gets confusing now over grades since the ICB moved I to II and II to III in order to fall in line with AAT qualification but now you cannot directly compare them to IAB without lopping 1 off the level number (or adding 1 to IAB).
For journals I would expect those to be taught only after people understood the structure of accounts. Personally I think that accounts should be taught right up front but other trains of thought suggest detailed double entry before accounts knowledge (to me that seems like building a bridge without a blueprint although the opposit arguement could be stated as attempting to build a house before the foundations)
No matter which body one is with it should all come together in the same way by the stage in one's studies where one is allowed to practice as a bookkeeper but during studies in a direct comparrison between bodies its quite difficult to do a side by side comparrison.
As for the specific question over what a journal is, I think that this is one of those professions where its easy to get lost amongst the jargon and for many who think that they know things they can often be surprised when they read the actual definitions.
As an extreme example, people assume that they know what an Asset and a Liability are but how many know off by heart the actual definition of them so realise when something should not be recognised?
__________________
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.
