A school has surplus garden waste every year that would otherwise be sent to the tip/recycling.
Grateful for your thoughts on the accounting implications of:
a) staff taking the waste products home for personal use (e.g. composting, use as fuel) in exchange for a donation to the school;
b) a local tradesman offering to swap the waste for xx hours of free labour.
For A) I think sundry income, (perhaps recognising it as a sale, rather than a donation?).
B) feels more problematic (tradesman potentially understating income and so not paying enough tax, school not recognising as a sale, so understating income, with VAT implications potentially)?. What would the best solution be? B has the potential to generate a significant multiple of the income generated under A.
Many thanks, one and all.
Replies (3)
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Am I missing something
What is this garden waste. If it would normally be taken to the tip why would someone take it away and pay for the pleasure of doing so.
A & B
Is A not 2 separate transactions, first being a donation (Dr Bank, Cr Donations) and second being someone removing waste which has no accounting entries.
B should be treated as the supplier/tradesman issues an invoice for the hours worked which is contra charged by a sundry sales invoice from the school for the same value.
Well that’s my opinion.