Hi, ive returned to manual bookeeping after 20 years and need a bit of reminding.......
an amount has been written off (bad debt) and entered in the cash book (sales side) in the total and sales ledger column. The bank rec now doesn't balance by this amount! From memory I seem to think there should be an entry on the purchase side too but can't remember how?
Apart from entering an adjustment on the bank rec, can anyone advise what needs to be done to make this clear please?
We usually ask newbies to do an short intro, background/how long a bookkeeper/do you have your own bookkeeping business or work for an Accountant or a company/how far you are with your studies/what qualification you are studying/what prof body you are with? Not too much, just helps get to know you and pitch any answers.
So, do tell.....why the manual bookkeeping? Is this part of your studies or for a client?
Re the question, bad debts will not touch your cash book. You need to create an expense account called Bad debts written off and debit that, the other side is to the SLCA (sales ledger control account)- the debtors individual account will be reduced by the amount. I'm assuming no VAT (if you need that info, give us a shout)
Then you bank will rec again.
HTH
edited to correct my dreadful typing!!
-- Edited by Cheshire on Wednesday 2nd of November 2016 08:17:42 PM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
All a bit boring and mundane really but here goes....... I fell into basic bookeeping 25 years ago for a very small sports and social club and regard myself as self taught, with quite a bit of help and advice from my mum along the way, who also did bookkeeping and Accounts etc! After having my children I then returned to it all 3 years ago, again by mistake! But this time using Sage, but again only for a small sports club! I left that job 3 months ago for where I am now, a small building contractors company who partially use Opera, but only for the sales and purchase ledger side of things. I now know this is down to the person who I've replaced, due to retirement, not wanting to change from her manual ways! So at the moment I'm doing a bit of both manual and computerised but hopefully not for much longer!
When I started I was sort of thrown in the deep end with just 1 weeks training and have had to quickly learn a new computerised system and trying to remember back to my manual days! I should add that I'm the only one involved in the accounts; I do everything except Payroll. So there's no-one for me to ask at work!!!
As explained the month before there was an amount written off which the lady before me wrote in the cash book under the sales ledger; this is the way she did things as she didn't use the cash or nominal ledger in Opera! I have the sales and purchase ledger on Opera and the cash book is the good ol' traditional red double ledger cash book!!! The debtors account has been reduced on Opera
Unfortunately, because I can't remember everything I did 20 odd years ago im carrying forward the adjustment on the bank rec!
I hope this gives you some insight into my Jurassic world!
Hi again
You would be surprised at the number of such customers out there who still use manual systems. There is certainly more of an art (or science?) to keeping such than some of the dumbed down systems that some software houses are trying to introduce, so it makes the job more interesting in some respects, but time consuming in others. certainly getting them all on a computerised system will be a far more interesting job than if they already had been - like a baptism of fire after having been away from such for so long.
Im a wee bit confused - it is just a double ledger book, then there arent usually analysed columns, so Im wondering if she was using the entry more like a memo line (like you do with discounts).
or is it an analysed cash book. So on the receipts side she has her reduction in the sales ledger for her bad debt, but she should have the same amount on the payments side under her bad debt expenses account. Looks like she may have forgotten to enter that. (Although - its not a cash entry, but I would understand her doing that for ease).
Perhaps have a look back for an earlier such transaction. Or take a photo of the whole book page (showing bank payments AND receipts part of the cash book), remove any identifying features and sling a copy on here. If nothing else it will make Shaun, the Moderator's day, although maybe thats only if they are just ancient looking books!
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I'm afraid I can't help you as I only do Payroll (on sage) and CIS but I work for a limited company with approx. 30 employees and my boss does all of the company book keeping manually. She has just graduated to having some of it on excel spreadsheets.
It all works perfectly and the company accounting fees are vastly reduced as she keeps such good records though.
She's put the amount in the total and sales ledger column on the receipts side as an addition, but no entry on the purchase side (They don't have a column for 'bad debts'!! )
Like you said previously I don't really understand why she entered this in the cash book in the first place and definitely not as a receipt adjustment!!! I can only imagine she was having a bad day!!
Im thinking I need to contra this amount out by putting it in as a minus entry on the receipts side with a note referring back to the month she did it?
Apologies for my lack of correct terminology - it's been a while
Was wondering if she put it in on one side as a reminder to deal with it later.
You should have another book for general journal entries and something needs to go against the debtors account.
Although if you are raising invoices on Opera, then I assume you just take the totals from the sales day book on there? Do you write this up manually? Also do you then use Opera as the SLCA?
if so, then you need to reduce the debtor account. To reduce the balance you would normally issue the account (do not send it out!) a credit note, but instead of the debit to sales, you need to debit the bad debts account.
Perhaps you could debit sales, but then journal to the bad debts from sales.
hard to say without knowing what else you have, but it needs to come out of the cash book as a contra, but needs to be entered elsewhere.
-- Edited by Cheshire on Friday 4th of November 2016 09:22:31 AM
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
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