My approach when a loan is received from a separate company is to credit a "loan from xxx Ltd" account and debit the bank account.
When part of that loan is repaid then I credit the bank account and debit the "loan from xxx Ltd" account.
The reason for my question is that I'm examining someone else Sage printout to try to reconcile a loan and they have credited the "loan from xxx Ltd" account when the money came in but when they've made repayments they've just applied debits to a "loan repayment account". This loan repayment account" also includes repayments to other people's loans.
I can't see any advantages to the 2nd approach? Can anyone explain the logic of it please?
Hi Harry
So hows about an intro before we start. We always ask newbies!
Usual stuff - what prof body do you belong to, do you work for yourself or in a practice/ firm, who is your MLR with, are you a bookkeeper or accountant, what qualifications, how long in role, where up to in your studies-what exams passed/with what body/who your MLR is with/in midst of doing, where based, what you did before this role? That sort of thing. Helps get to know you but also how best to pitch answers.
Who has processed the sage entries that you are describing? What is your role in this scenario - bookkeeper or accountant doing year end?
__________________
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've no professional qualification, nor am I studying. I work for myself and oversee or do the book keeping for 5 social enterprises and have been doing this for 20 plus years. The companies currently use Xero or Sage Accounting (the cloud one).
The other company's book keeper has processed the Sage entries (not the cloud one) and I am trying to reconcile the loan accounts as bookkeeper for the company that made the loans.
Does the issue go back before your prior year end and do you have an Accountant who does the year end process?
Have the entries been occuring since a change of bookkeeper or as a result of another change?
Do you use bank feeds?
It is incorrect processing. See it a hell of a lot!! It could have been caused by using the bank feeds with insufficient checking of auto allocation/assuming the feed will do all their work. Could be an inexperienced bookkeeper. Or the two combined. Could well be that Accountant sortes out at year end via their extended TB and they just dont update the software (bad form in my eyes). Get the bookkeeper to work back, but only until start of the current period or you could be causing some major issues. They could also journal prior periods incorrect balances but via a suspense type account (so it highlights for the Accountant) so at least the balances are correct, but ensure they date it in this period.
-- Edited by Cheshire on Tuesday 10th of March 2020 09:55:40 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
Thanks for your comments - which chime with my approach.
In answer to your questions:
Yes the issue goes back before year end and they have an accountant who does a year end adjustment which gets entered in Sage but just as a single journal. I expect it will just say, "loans" rather than bother identifying which company is owed what.
It's always been the same bookkeeper but the company has expanded with lots of complicated loan arrangements etc.
I don't know if bank feeds are used.
-- Edited by HarryStottle on Thursday 12th of March 2020 08:27:31 AM
