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Accountant Journal in debtors control issue

My accountant suggests credits in my customer accounts, but this will leave me with a problem

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I know you'll say "Ask my accountant" but she is very hard to pin down (I am going to change accountant this year for sure).  Eoy 2019 they journaled £630 from debtors control into accruals without telling me, I went ahead and processed my customer receipts into my usual nominal without reversing this journal beforehand.  Now at eoy 2020 I have £630 difference between my debtors control and my aged debtors.  My accountant suggests reversing the journal (debit debtors control and credit p&l ) then assign credits to my customer accounts set against p&l.  These invoices have been paid during 2020, and so I will have 42 incorrect customer accounts on my system going forward....  can anyone help me?

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By adam.arca
27th Jul 2021 12:54

This sort of adjustment is often a source of misunderstanding between accountants and clients / bookkeepers because we tend to work at the control a/c level and not the individual a/c one.

What was the 2019 correction actually for? It seems like it might have been to defer sales? If so, then I would have thought a reversal in the 2020 figures would be in order and that no adjustment would be needed to the individual a/cs. If you did that, would that solve your problem?

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By LittleDeb
27th Jul 2021 13:35

It was to defer sales yes. My thoughts exactly, that's what I don't understand - surely reversing the journal will solve it - I don't see why there's a need for the credit notes. They say that will correct the Aged debtors to agree with the debtors control, but surely the journal will do that?

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By petersaxton
28th Jul 2021 10:20

Surely the entry would be:

Dr Sales a/c (P&L)
Cr Deferred revenue (B/S)

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By Sandnickel
27th Jul 2021 12:54

If you don't want to do what your accountant has suggested (I wouldn't to be fair) then journal from debtors to another nominal (other debtors?) and carry on as normal.

This will correct your sales ledger and the accountant can deal with their adjustments at the year end.

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By LittleDeb
27th Jul 2021 13:38

Would this result in the aged debtors matching the debtors control account? They seem to think the aged debtors should be adjusted.

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By Leywood
27th Jul 2021 14:23

try it and see.

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By Sandnickel
27th Jul 2021 15:38

Yes it should. It seems to me that they have made an adjustment that you have then corrected (so effectively double counted).

The accountant can then remove the adjustment when they do the next accounts.

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By tltodman
27th Jul 2021 14:18

Was it a year end journal to gross up overpayments/payments on accounts on some debtor accounts at year end? If so then reversing at start of year (or whenever each of the balances correct themselves) would sort it

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By Bobbo
27th Jul 2021 14:39

LittleDeb wrote:

My accountant suggests reversing the journal (debit debtors control and credit p&l )

First point to make is that if the original journal was debit debtors control credit accruals then this journal would *not* be reversing it.

Surely the journal here to reverse is debit accruals credit debtors control. Post this and all will be fine. Also if the accountant is not explaining what the purpose of each journal they process is then demand they do so.

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By tom123
27th Jul 2021 15:37

In my view any accountant suggesting journals to control accounts doesn't really care that much about how you operate your systems..

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By Moonbeam
27th Jul 2021 16:00

Yes, and thumbs down to all accountants who do that.

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By adam.arca
27th Jul 2021 18:34

tom123 wrote:

In my view any accountant suggesting journals to control accounts doesn't really care that much about how you operate your systems..

Disagree, but then we’re coming at it from different angles.

If I was running the ledgers for a large company, like you (and like I used to do), then my opinion would be the same as yours.

But as I’m overseeing the books for lots of small clients, most of whom don’t even go near the TB, I see no issue at all with posting a reversing journal to a control a/c so that it agrees with the accounts. The trick is, however, to ensure it is posted as a reversing journal and that it isn’t going to carry forward as a difference.

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Replying to adam.arca:
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By thestudyman
28th Jul 2021 14:02

The problem in this situation was it was the wrong journal in the first place! Simply to reclass revenue to deferred revenue is:

DR revenue - income statement
Cr deferred revenue - balance sheet

Why the accountant posted a journal to debtors (which has nothing to do with deferred revenue) I have no idea.

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By LittleDeb
28th Jul 2021 09:54

Each year I have a different contact at the firm and they don't seem to know what the person before was doing or why. That's the source of the problem. I just want to get this sorted and move on. Folks on here have been very helpful, not least in validating that it is a confusing situation!

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Replying to tom123:
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By LittleDeb
28th Jul 2021 09:48

tom123 wrote:

In my view any accountant suggesting journals to control accounts doesn't really care that much about how you operate your systems..


Absolutely, and I'm meeting with my new accountants today!
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By pauld
27th Jul 2021 16:44

I would stick to spreadsheets and avoid this sort of accounting nonsense. However I do appreciate that many of the contributors on here get very excited about this sort of thing.

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