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Journal Entry

The situation is this:

Client charges Management Company £75,000 + VAT for appearance fee.

Management company pay £89,825.02 in total as they deducted £174.98 for clothing costs that they had purchased on behalf of the client.

My invoice is of course £75,000 + VAT but now I have £174.98 outstanding on the management company's customer account.

What's the correct way of getting rid of this amount? I do not want to put it through the bank as no physical money was transferred between the parties bank accounts. I also do not want to do a credit note as there is nothing to credit against the clothes account and I also do not want to change the invoice.

Unfortunately, I did not create a proper service invoice within Sage. This would have allowed me to add a discount in the first place. Instead I created a batch customer invoice. I've also run the VAT return for the period this relates so I cannot even delete the invoice and re-do one with the discount as this would screw the VAT records up.

I'm STUCK!

Any suggestions would be greatly appreciated.

Thanks

Replies

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Who has the clothing invoice?

If your client already has the clothing invoice you enter the purchase, and contra it against the sales invoice.

If your client does not have an invoice for the supply of clothing, he should get one from them, and then you can contra it off.

EDIT: also check whether the clothing is allowable for tax purposes.

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Yes Contra

A contra is like giving cash of £174.98 and receiving cash of £174.98.  So treat as debit cash, credit customer account and then separately credit cash and debit Creditors account created from the purchase of the clothing - or nominal if you havent managed to obtain the invoice yet (not claiming any VAT of course).

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Thanks for your replies.

I did think of this but it's not a proper invoices it's just a till receipt from JD sports?!!

Can I still use this solution with only a receipt and not an invoice?  I suppose a till receipt really is a shop's own invoice, right?

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Till receipt is an invoice

If you buy a computer from an electrical shop you will be given a till receipt and theres no problem with that.  It doesnt matter how the clothes were paid for. 

I will let you decide whether sports clothing is a tax deductible expense.

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I see your point! :-) thanks.

The clothing is allowable as I have a dispensation for him for all of his clothing due to the nature of his work.

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