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Add an adjusting entry for an opening balance

Add an adjusting entry for an opening balance

Can you please tell me how to add an adjusting entry for an opening balance in the below situation:

In year ending 30/04/2015 there were adjustments made to a customer's X account as a lot of receipts had been missed off in that year. It turned out now that part of these adjustments have been wrong which means that the closing balance was too high. This should have been rectified on Sage by the previous bookkeeper but for some reason it hasn't been done. I need to put on credits now so that the balance on customer's account is correct. The adjustments also need to be put to a suspense account so that an accountant can pick this up at the year end.

Would it be correct if I just enter a credit in Customer Ledger on Customer's X account by entering a credit opening balance? In this case, what date shall I use, current date or maybe 01/05/2015 - the first day of the current financial year?

Any suggestions on how to process this adjustments on Sage would be very appreciated.

Thank you.

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07th Mar 2016 19:37

Nothing like that

Unless there is something very strange going on you should make the entries that have not been made.

Enter the customer receipts when they happened.

Why use a suspense account?

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By Madi
07th Mar 2016 20:03

Re: Nothing like that

Closing balance for year ending 30/04/2015 was too high. Therefore I need to make an adjustment now to correct it.

A suspense account entry is needed so the accountant would see this adjustment when he does this current year end. But I'm not sure how to properly do the opening balance adjustment and show it on a suspense account at the same time.

 

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By tom123
07th Mar 2016 20:00

So how did the bank get posted.

You say the receipts were missed off.

How did the bank get posted - did the receipts get coded as cash sales or something.

Was the bank even reconciled.

Have final accounts now been prepared and submitted to the relevant tax authorities - if so who by, and what did they do about this situation. Did you get a closing set of journals to post?

It is nearly a year ago, so someone must have done something by now.

How much is the difference.

What did the customers say if you kept chasing them for money they had paid.

A lot more questions to answer really, before you could be certain what to do.

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By Madi
07th Mar 2016 20:26

re: So how did the bank get posted.

I haven't got answers to all these questions as I hadn't worked for that company at that time and the previous bookkeeper is gone now. I know that the previous year's records on Sage were far from perfect. Therefore the accountant made some adjustments. It turned now that the closing balance was about £200 too high. I need to correct it now and record it (somehow) on suspense account so the accountant can pick it up at the year end.

It should have been rectified on Sage by the previous bookkeeper but it hasn't been done. Her bookkeeping was far from perfect.

Final accounts for year ending 30/04/2015 have been prepared and submitted to the relevant tax authorities by the accountant. He thought that the adjustments he made at the year end were correct but it turned now that these were incorrect. When I started recently chasing the client for payments it turned out and was proved that our records were incorrect.

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07th Mar 2016 20:05

Do the opening balance adjustment

If you do the opening balance adjustment it will automatically appear as a suspense item to complete the double entry.

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By tom123
07th Mar 2016 20:22

I wouldn't be happy with that

Personally, I would not be happy with making an entry 'because something is too high' - without really getting to the guts of the actual problem.

Although what Scalloway says is likely to get you where you seem to want to be. 

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By tom123
07th Mar 2016 20:35

So, not huge amounts.

So we are not talking huge amounts here. 

I would take your accountants trial balance at the last year end and work towards that.

I still don't understand why you would need to end up with a suspense account transaction all the way through the current year relating to adjustments from a previous year. That still seems wrong to me.

Your accountant really needs to advise you on this, or else you will have the same issue (but probably in reverse) next year.

If you adjust your records to agree to the filed accounts you will then both be starting from exactly the same place this year.

Check whether your sales ledger control account agrees to the sum of all your sales ledger balances. Check your help instructions on your software for how to do this.

 

 

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08th Mar 2016 01:35

Double entry

You seem to be focusing on the customer accounts being wrong but ignoring what else is wrong.

Explain to the accountant what you have found out and ask them what to do.

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By tom123
08th Mar 2016 08:48

Night owl

petersaxton wrote:

You seem to be focusing on the customer accounts being wrong but ignoring what else is wrong.

Explain to the accountant what you have found out and ask them what to do.

Couldn't you sleep, Peter? :)

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08th Mar 2016 09:06

Sleeping earlier

tom123 wrote:

petersaxton wrote:

You seem to be focusing on the customer accounts being wrong but ignoring what else is wrong.

Explain to the accountant what you have found out and ask them what to do.

Couldn't you sleep, Peter? :)

I was sleeping earlier.

Being self employed I sleep when I want to and work when I want to.

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