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Cash Account difference on Pub books

A pub trading via a Limited Company has its accounts drawn up and there is a cash account difference arising. Sales exceeding amounts banked and invoiced cash expenditure/ wages paid. It's possible that some cash payments have not been recorded but can  you confirm correct treatment would be to debit director's loan account and assume difference is 'drawings', or put to P&L and add back difference in tax comp?.

Thanks for any confirmation.

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Why not sales?

How do you know that this is not sales that have been omitted?

If the clients records are incomplete then I would try and make sure that going forward they have some proper systems in place to stop this happening again - all of our pub clients have takings sheets that are filled in daily or weekly reconciling the till to the physical cash.

For last year to be prudent you will have to assume sales and VAT and tax will be due on this amount, unless you can identify where it has come from

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Its the other way around though as recorded takings minus recorded expenditure produces a cash in hand figure in the books which is higher than the actual physical count, so its what to do with the difference?

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Apologies

cde123 wrote:

Its the other way around though as recorded takings minus recorded expenditure produces a cash in hand figure in the books which is higher than the actual physical count, so its what to do with the difference?

 

Sorry misunderstood - then yes should go to Drawings / DLA

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Put to drawings

The normal safe route is to put excess cash to sales, and a shortfall to drawings. This can result in them paying unnecessary tax and it can be avoided by them keeping better records, so as occca says, get them to reconcile the cash in future.

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