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Accounting for Customer contributions to meals?

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I have a question regarding contribution to meals from customers/potential clients.

Every year my Director would invite a few founders of companies or industry experts to an evening of dinner and drinks gathering at a restaurant in which they would discuss potential businesses and share eperiences. 

We ask that each individual contribute £35 to the event and my company would cover the rest of the bill at the end of the evening.

I was wondering how I would account for the £35 contribution made? can this offset the entertaining expense? Would this have any negative effect if I were to reduce the entertaining expense account?

 

Thank you in advance

 

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03rd May 2019 10:03

I'd view the guest contribution as a reduction in the entertaining expense, although there is a (weak) argument that the dinner is a revenue-generating, but loss-making activity in its own right.

Bear in mind that you should account for VAT on the guest contributions - ie treat the £35 paid as £29.17 plus £5.83 VAT.

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