How to do a Sage Journal/s to put things straight?

How to do a Sage Journal/s to put things straight?

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I am working on the Month end for Nov and will need to enter a Journal/s to 'adjust' the following things that have happened. Please could I have some info on how do I do it?

Insurance of £500 per month is paid by Direct Debit.

Sep – No Direct Debit was taken for the Insurance

Oct – 'Double' insurance payment of £1000 (in total) Direct Debit was taken (2 taken one on 2nd one on 30th)

Nov - £500 Direct Debit was taken for the Insurance.

Bank – 1200

Prepayments - 1103

Insurance - 7300

I really want to get my head around this adjustments business but am really struggling with it.

What amounts need to be entered and how do I date them and to what nominals? Do I need to use the Prepayments nominal?

Thanks in advance for any help.

Poppy

Replies (7)

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By Ben Lauritson
20th Dec 2013 15:40

If I'm understanding the situation correctly..

If there was a payment due for September but not taken until October, then there should have been an Accruals balance for £500 in September, which the October payment would have cleared. The first October payment would then be Dr Accruals £500, Cr Bank £500.

Forgive me if I'm barking up the wrong tree entirely, just trying to make sure I understand what the problem is you're trying to solve.

Thanks (1)
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By poppydew
20th Dec 2013 15:55

Thanks Ben!

The problem I am trying to solve is that of making sure all the costs are 'assigned' to the correct months (even though in reality this is not how they come out of the bank)

So given that I have posted a 'bank payment' for both of the Oct DDs to the Insurance nominal 7300 to correct this I would post a Journal Dated 31 Oct Dr accruals £500, Cr Bank £500?

I think I need a mince pie and a sherry :S

Thanks (1)
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By twickers
20th Dec 2013 17:24

Sage

no minc pie or sherry /   try brandy and sage course

it is annoying to see the number of companies using Sage/ without ever reading a manual

or taking a training course/  ( i have yet to encounter one who did - over near 20 years)

Thanks (0)
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By Ben Lauritson
20th Dec 2013 17:48

Expenses and Accruals

OK, it sounds like what you need is something like:

30 Sep - Dr Insurance £500, Cr Accruals £500
02 Oct - Dr Accruals £500, Cr Bank £500

Basically an accrual is when you incurred an expense in a particular accounting period but have not actually paid that expense yet (as contrasted with prepayments, which are when you pay an expense before the period in which the expense is to be incurred). This will show that in September you incurred Insurance costs of £500, which were paid in October.

The insurance payments for 30 Oct and Nov should then just be entered as normal, assuming that those are indeed the months to which the payments relate.

Hope that all makes sense :) Admittedly I'm still relatively inexperienced when it comes to bookkeeping (got the relevant qualifications but only a few months practical experience) but as far as I can tell those are the correct entries for what you want to achieve.

Thanks (1)
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By andy.partridge
20th Dec 2013 18:20

Firstly and secondly

Firstly,there are no prepayment adjustments to make, only accruals. Secondly, your adjustments should not use the bank because the bank is already correct.

So, in September

Debit Insurance (7300)

Credit Accruals (2109)

In October

Debit Accruals (2109)

Credit Insurance (7300)

 

Thanks (2)
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By Richard Willis
21st Dec 2013 19:15

Hang on!

If the payments are going out on the last day of the month you need to check to which month they relate.  It may be that they are next month in advance, in which case Sept needs no adjustment.  Check the start date of the policy and when the payments started.

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By andy.partridge
21st Dec 2013 21:16

Of course
Also check there are 12 instalments and not 10 across the year.

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