Hello
Have a problem as no TB has been provided as yet from Accountants based on manual accounts set up on spreadsheets and databases etc up to end of financial year ie 30th June. This involved debtors, creditors, bank, account, wages control,
So my new accounts records start from 1st July ie there are no balances as they are all on old manual system and am wondering how i deal with opening balances as there is no TB as yet, I do have opening debtors balances and bank balance but what journals do i do until the TB is ready
Replies (8)
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1. Open up an account for the year just ended.
2. Enter any unpaid sales invoices on their real dates of issue.
3. Do the same for any purchase invoices.
4, Journal in the closing bank balance.
5. Close off the old year and discard it. It's rubbish.
6. You'll now have a bank account, sales ledger and purchase ledger that you can work with in the new year.
7. The other balances aren't so urgent and you can deal with them later.
8. Simpuls.
I would use a suspense account for any differences. It should end up being zero when you have all the information for the opening trial balance.
Yes just journal in the closing balances from the manual system when the accounts are closed. Use a suspense code as you will already have set up some balances for bank, debtors and creditors when you first started using the new system. The suspense account should balance to zero when you are complete.
The opening sales invoices should be entered with their correct balance in a previous accounting year. The other entry will be suspense.
I have not used cash accounting for VAT on a computerised system so I can't give you a definitive version but I would assume how you deal with VAT will be in the software manual. You could have a trial run then revert to a previous backup.
They seemed to change accounting systems every couple of years where I used to work so I had the process down to a fine art when I left.
Much appreciated.
The confusing thing is that as you know a number of invoices make up the sales debtor opening balances and these were entered with the original dates, as this was a cash accounting system, ie unlike normal standard accounting VAT where balances are posted as gross totals these were posted with nett and vat separate, so the entries have been posted as a debit to debtors control and one credit to sales output tax and another credit to suspense. It leads me to believe that sales output tax has been duplicated ie as within those debtor opening balances the original invoices have been posted with also a credit to output tax. Everything I have read on cash accounting does say that opening debtor balances must be entered with vat, so as to match future sales receipts, and as you may know cash accounting is based on vat paid on sales receipts but thanks very much for your comments.
You can, of course, test this by running a VAT return for a current period, say, July, before you enter any receipts from debtors. Output tax should be zero.
Having said that, debtors should appear gross, whether or not the VAT is due to HMRC. Nothing in your post leads me to believe that output tax is being duplicated.
Thanks
With ref to opening sales debtor balances with a cash accounting vat scheme what would be the credit balance if these are debited to debtors control.
The software should do this for you. That's why you are entering the invoices on their original dates.
Just make sure the flags are set for cash accounting before you start.