I was doing credit control for my new client and one of the customers, showing as unpaid, my client was certain had paid. I checked with the customer when payment had been made and found the cheque details on a paying in book dating back to July 2014. The previous bookkeeper, for some unknown reason, hasn't posted payment for a few cheques, yet all the bank reconciles. I believe a bank receipt has been done for the difference of the reconciliation ??? but how do I rectify this and post the payment without upsetting the bank reconciliation. I clearly need to post a journal, but not sure how. Do I need to post a credit with T9 to the customer?
Post a credit for each identified customer payment to whichever code the previous customer posted the difference-receipt (with the detail explaining what's going on)
Post a payment to wherever the previous bookkeeper posted that difference-receipt that matches each identified customer payment (again, with the detail explaining things), then post the customer payment as it should have been.
Doing either of these will have no effect on the bank reconciliation - in the first case because you simply aren't touching the bank account, and in the second because you are posting payments and receipts for the same value, so they contra one another out.
As for the tax code - rather than just assume T9, consider what that previous bookkeeper did (i.e. whether they declared VAT on the difference-receipt) and look at what scheme the client was on at the time. You need to work out whether
the VAT has already been correctly accounted for (for example, if the VAT was paid in the correct quarter from the invoices, and the diff-receipt was posted as T9 or T0)
the VAT has been overpaid (paid on the invoices, and on the receipt)
the VAT has been underpaid (cash basis, and the receipt was T0 or T9)
Once you've established that, you can work out how to treat the VAT on your corrections. (In fact, this may also affect which of the two methods of correcting the mistake is most appropriate).
-- Edited by VinceH on Thursday 23rd of July 2015 08:53:13 AM
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
No - it's how the VAT was handled that makes the difference.
Consider this scenario as an example:
The company is on an invoice basis for the VAT. Therefore the VAT on the invoices was paid in the quarter they were raised. Your predecessor decides that because they are posting a bank difference as what amounts to unidentified receipts, VAT should be declared on that.
The result is that the VAT has, in effect, been paid twice.
And now consider this converse example:
The company is on a cash basis for the VAT - so no VAT has been paid on the invoices, because they are still unpaid in the accounts. The previous bookkeeper decides that because they are posting a bank difference, and doesn't know what it is, it should be posted as T9.
The result in this case is that VAT has been underpaid.
That's what you need to establish: Whether the VAT has been paid, overpaid, or underpaid - and this is determined by a combination of:
The VAT scheme the company was on at the time, and
Whether or not your predecessor declared VAT on the difference posting
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
It's Standard VAT so VAT would have been paid last year, but I'm now investigating the entire situation because the balancing payment entered as 'difference to b/st' is actually a bank payment and for three times the amount of the sales receipt, so I am now having to work out what is missing, if anything. This is stemming from, not my predecessor, but their predecessor!!!!
"It's Standard VAT so VAT would have been paid last year,"
But you also need to consider the second part of that: did the person take into account any VAT on their 'corrections'? You just need to think/follow the transactions through logically.
"but I'm now investigating the entire situation because the balancing payment entered as 'difference to b/st' is actually a bank payment and for three times the amount of the sales receipt"
Ouch. So their correction wasn't just due to receipts that hadn't been posted. There must be missing payments, as well.
TBH, at this stage I think I'd be inclined to reconcile the bank account again for the relevant period. The old way: on paper.
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Vince M Hudd - Soft Rock Software
(I only came here looking for fellow apiarists...)
A Payment was made to a supplier on 10/06/14 for £3807.00. It was originally posted as a POA but then deleted.
A cheque was received from a customer for £822, but, for some unknown reason, never recorded against the customer, yet paid into the bank on 24/06/14.
On 26/06/14 a bank reconciliation was done with a BP posted to 5*** (Cost of Sales) stating Difference b/stment for £2985 (the difference between the above two transactions). There was No VAT put on the payment.
The supplier has now had his account written off, so how do I now account for the payment made to them? Also what about the receipt?
If I do a Bank payment for the remaining amount of £822 posted to the same nominal account, then do the Customer receipt and date them the same date of 26/06/14 this will show the amounts without affecting the bank statement - I can also change the details on the original bank payment to show it was paying the same supplier. There will be no VAT to claim. Is this the right way to do it.
