I'm having some difficulties with VT opening balance for profit and loss brought forward. The books are for an existing company and I was provided a trial balance so I could enter the opening balances. I have entered the profit and loss brought forward figure in the trial balance entry box. However VT has also created a YET transaction for the same date which also has a p+l brought forward entry.
The end result being that the profit and loss at end of year is approximately double what it should be.
Check the dates that you have used. Opening balances should more correctly be called closing balances as you enter them as the last day of the prior period.
Also check your opening balance contra's to ensure that you are balancing. Remember that the B/Fwd P&L is the one that opened the prior year, not the one that closed it.
The profit in the YET of the closing period should be exactly the same as the one from your previous set of accounts. If not you've gone wrong somewhere.
Have a read of this thread and see if anything helps
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.
Thanks very much for your quick and helpful response, you've saved me a tenner I would have paid to VT support and a fair bit of panic. I'm still pretty new to bookkeeping and trying to teach myself on the job.
The opening balance was balancing out to zero but I had entered a number of SINs from the previous year in the customers ledger. I have corrected this by moving them to Trade debtors which appeared on the TB as debtors control.
The Trade debtors account now has the journal from the TB as an asset and several sales invoices from previous years as liabilities.
This seems to work OK - is it the right thing to do?
Hi Tom
We normally ask newbies to do a short intro about themselves, so you say about learning on the job- what is your background/any formal qualifications completed or in progress/which prof body/do you work up to TB only or beyond/working for yourself as bookkeeper or in a practice or just for one client/employer/what software do you normally use or are you trained in using? Don't need too much, gives us a flavour and more importantly know how to pitch the answers.
The SiNS you entered o take it match the outstanding debtors position at the period end. Are these still showing as outstanding on the individual ledgers and the overall balance on the debtors control?
When you say they show as outstanding as liabilities, are these in the conta account?
Might be easier if you pop up a screen shot of the New TB, with any identifying features removed of course.
__________________
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
Thanks for your response. Apologies for not introducing myself properly, I've been asked to do this job at the last minute (year ended in March and accounts are due now!) so was in a mad panic trying to get it done.
I'm not a bookkeeper by trade but have been working for a small company for the last couple of years and doing the books is one of my responsibilities alongside office admin/IT support. I've had no formal training or done any qualifications, just self-taught on the job with some support from websites and our accountant. It's a fairly simple job as we are primarily a cash business with some online sales via PayPal, therefore no ongoing debtors or creditors.
However, I have recently been asked to do the books for a friend (one man band ltd company) and inherited a bit of a mess as he's never used a bookkeeper in the past and uses an Excel sheet for sales invoices with few other records kept. How his accountant has been doing the end of year accounts is a bit of a mystery! This is the first time I've kept books for a firm with ongoing debtors/creditors so it's all new to me. I use VT for both companies.
I've entered all SINs dated prior to the start of year if there has been a payment received during the current period. My mistake was entering them as
DR Customers: Client Name
CR Income: Fees
I have now edited them to
DR Customers: Client Name
CR: Debtors: Trade Debtors
The remaining SINs I entered are all dated during the current period and have either been paid or remain outstanding on the individual customer ledgers. Therefore, my debtors outstanding balances are in the Trade Debtors account for all invoices raised in previous years and in the individual customer ledgers for invoices dated during the current period. I'm happy that the TB, P&L and Balance Sheet all now look correct but would be grateful if anyone could let me know if I've broken any bookkeeping rules/practices with what I've done.
I'm unsure what you mean by the contra account. If you're referring to Opening Balances Contra it is empty as I entered the opening balance using VTs Journal (Trial Balance Style) feature rather than doing manual journals to the Opening Balances Contra ledger.
Here is a copy of the current TB produced by VT. I have reduced all figures via a fixed percentage as I don't want to post the actual values online for obvious reasons.
Ledger
Account
Balance
Ledger balance
Income
Fees
-1181.00
Interest receivable
-0.06
-1181.07
Cost of sales
Subcontractor costs
514.02
514.02
Expenses
Accountancy fees
1.45
Bank charges
1.78
Insurance
4.20
Light and heat
5.09
Postage
5.11
Rent
19.49
Stationery and printing
1.63
Subscriptions
0.41
Telephone and fax
0.65
Travel and subsistence
61.92
Wages and salaries
222.95
Water Rates
0.08
Write backs/discounts
-0.07
Write offs/discounts
3.31
328.00
FA - equipment, fixtures & fittings
Cost - b/fwd
31.69
Cost - additions
16.37
Depn - b/fwd
-29.16
18.89
Customers
Customer 1
6.91
Customer 2
10.25
customer 3
12.92
Customer 4
0.86
Customer 5
3.89
Customer 6
6.38
Customer 7
1.73
Customer 8
5.61
Customer 9
5.55
Customer 10
2.59
Customer 11
8.53
Customer 12
4.84
70.08
Debtors
Trade debtors
99.99
99.99
Bank
Current Account
135.45
135.45
Creditors
Director's account
209.94
Net VAT due
101.81
PAYE and NI
38.16
349.91
Share capital
Brought forward
-0.65
-0.65
Profit and loss account
Brought forward
-334.61
-334.61
Total
Net profit for the year
-339.04
I realise I've waffled a bit but hope I've explained the situation correctly and would be grateful for any advice.
Thanks
Tom
-- Edited by tom83 on Friday 16th of December 2016 03:57:34 AM
Hi Tom First things first - lets get the legal (etc) stuff out of the way.
Given this is now a client - do you have MLR cover? if not then you are breaking the law and the penalties are very stiff. £5000 fine/2 years in prison. if not - you need to sort that now before you go any further.
- do you have PII cover? Whilst not a legal requirement, it would be foolish not to have such in place. Friends soon become frenemies when they have a tax inspection that has gone wrong and they have incurred a lot in costs and fines and look to be recompensed by the person who messed it up (ie YOU!) and then sue and take your house and your children (the latter you may be happy to hand over )
The other questions I have are in relation to checking you actually have everything you need to be able to complete this job given the imminent deadline. Ie have you sent a letter to the departing accountant to ask for all of his files, including the fixed asset register? Do you know the basis of the depreciation policy used in previous accounts, do you know on what FRS basis the accounts were prepared, are you up to speed with accrual accounting/capital allowances (and knowing what has been claimed and therefore what is left in the pools), then also are you ok with the required computations for the Corporation Tax, including what can/cannot be included (eg entertaining costs).
The only reason I ask this - not to scare you or bamboozle but just given the deadlines that are fast approaching as it gives little time to read up on such things and Accountants are used to the back of a fag packet approach that your pal takes so Im sure his existing Accountant can sort this easily.
Anyway......if you are sure you have all you need and want to continue . I cannot advise from just a TB whether or not you have broken any Accounting rules Im afraid. Plus given the fact you havent included any screen prints its hard to see what is going on here, but there are appear to be a couple of issues.
Firstly (sorry for another Q) - to double check....the Trial Balance you have from your pal was I assume your CLOSING TB from his last years accounts ie at 31 March 2015?
This shouldve been entered as at 31 March 2015, so that when you look at a Trial Balance for the 1 April 2015 you can see the brought forward information.
I can see no accruals/prepayments - which there should have been at least an accrual for the Accountancy fees, but at least for now that should make a bit easier - so there will be no reversing or adjusting entries to be made on 1 April. But you need to double check the accounts/closing TB.
So - when you completed the closing TB - did it actually agree, line by line with the previous one?
You should have only entered SINS dated 31 March 2015 but only for those debtors who had balances outstanding at the end of the year. Which I think is what you indicated. The easiest way, if you are not sure about your double entry is to key the credit side to a suspense account (which in VT happens to be called the Opening balances contra) - this is the method for transferring existing balances and NOT for ongoing transactions.
You are correct in your original mistake of not setting up the EXISTING customer balances to fees - because that would double count the income. BUT unfortunately you now appear to have debited your debtors as well as credited them so cancelling the invoices out, although Im not able to see it too clearly due to the lack of screen shots and a proper opening TB ie one that does not show the following years entries. Try setting up a test file and key one sin and see what pops up on the TB - it would normally DEBIT Customer (ie debtors) and Credit Sales. Wthen try one debiting the Customer and Crediting Debtors - you can see you are just cancelling one transaction out with another.
Whatever has been done since I can see that the trade debtors account is now in debit (it should generally be as its an asset), but I am wondering also now if this is being used as some kind of sundry debtors account.
Your clients balances amount to £70.xx - does this ACTUALLY match the amount that remains unpaid - that is a key check that needs to be undertaken.
Dare I suggest you start again and either follow VT instructions for the transfer of closing balances http://forum.bookkeepers.network/t63008669/vt-transaction-opening-balances/
or Shaun's very comprehensive ones in this thread http://forum.bookkeepers.network/t63008669/vt-transaction-opening-balances/ (have a good read through first of all of the thread perhaps)
__________________
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
Thank you for taking the time to write such a comprehensive response. I have to admit I wasn't aware of my legal obligations with regard to registration with MLR cover etc and agree I will have to get that sorted, it was rather naive of me not to look into this prior to taking the work on.
From your response it seems that I have given the impression I will be doing the end of year accounts. This is not the case, I am just doing the bookkeeping and providing the records to the existing accountant for him to do them. I am not aware of the depreciation method or corporation tax calculations and expect the accountant to do those calculations. The TB I received from the accountant for last year was titled opening TB 01.04.15 so I entered it on that date, however I presume from your post that I should have entered it on 31/03/15. Is that the case?
I'm unsure what you mean by "So - when you completed the closing TB - did it actually agree, line by line with the previous one?" -are you asking whether my TB as at 31/03/16 matches the TB provided by the accountant for 31/03/15?
With regard to the SINs I did only enter those from previous years where there was an outstanding balance. When payments were received it has resulted in the balance of Trade debtors account being reduced accordingly. The end of year balance on that account now matches the outstanding debt from previous years. The clients balances do match exactly what remains unpaid in the current year so I am confident that this is at least correct.
I guess there is no harm in posting screenshots so I have attached shots for last years TB I entered and the TB at 31/03/16.
Thank you for taking the time to write such a comprehensive response. I have to admit I wasn't aware of my legal obligations with regard to registration with MLR cover etc and agree I will have to get that sorted, it was rather naive of me not to look into this prior to taking the work on.
From your response it seems that I have given the impression I will be doing the end of year accounts. For some reason I read your comment about doing the books, as full set of Accounts, instead of just bookkeeping, plus I had just been reading another thread about someone being asked to be the Accountant for someone he is employed by - think I was getting the threads mixed up so Im sorry about that! This is not the case, I am just doing the bookkeeping and providing the records to the existing accountant for him to do them. I am not aware of the depreciation method or corporation tax calculations and expect the accountant to do those calculations. The TB I received from the accountant for last year was titled opening TB 01.04.15 so I entered it on that date, however I presume from your post that I should have entered it on 31/03/15. Is that the case? Does the Accountant understand that you are moving things to (new) software? Usually when records are already in software you provide the year end TB to the Accountant who will then do the necessary adjustments and provide some adjusting figures for you to key in the software. There are ongoing debates about the best way for such adjustments to be keyed with some believing in last day of the accounts period (Im in that camp) and others doing them on the first day (this can screw up the management accounts produced direct from the system, although adjustments can be done to the managements, but that in part is why I dont like it - why do extra work when you dont need to!) So usually if you are then moving from one piece of software to another you enter the year end TB on the last day of the period (in your case 31/3/2015). If you are moving from manual to software then you should have the TB from the manual records to be able to input into the software. Of course in your case you dont have it from any system as effectively there was no system. BUT I wouldve still expected the Accountant would have given you the TB incorporating any of his adjustments) as at the last day, given that is when he will produce the Accounts. So I am wondering if he has forgotten that you really need such.
I'm unsure what you mean by "So - when you completed the closing TB - did it actually agree, line by line with the previous one?" -are you asking whether my TB as at 31/03/16 matches the TB provided by the accountant for 31/03/15? No. What I mean is - had you been given a TB for the year END March 15 by the Accountant and then you keyed it in - you should make sure it totally agrees before you key anything else in because this is your start, your base. I cannot see the opening balances he has given you, but from the top two entries alone I am thinking he is in the 'key adjustments on the first day of the next period' camp. Have you checked back the TB from 1 April to the one given by the Accountant? As long as you have I would leave well alone, but perhaps at this year end let him have a copy of that TB so he can see that you have matched his.
With regard to the SINs I did only enter those from previous years where there was an outstanding balance. When payments were received it has resulted in the balance of Trade debtors account being reduced accordingly. The end of year balance on that account now matches the outstanding debt from previous years. The clients balances do match exactly what remains unpaid in the current year so I am confident that this is at least correct.
I guess there is no harm in posting screenshots so I have attached shots for last years TB I entered and the TB at 31/03/16.
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