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Itemising creditors and debtors on initial account set-up
It woud be useful to have the ability when setting up an account for the first time to be able to itemise the creditors and debtors from prior year rather than just putting in a total figure. That way when the relevant payments and receipts appear in the bank statement I can track who has paid/been paid. Or am I missing something?
Mark
Mark
I’m having fun - weird but there you go
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Inappropriate?Hello Mark,
There's nothing weird about enjoying using FreeAgent :-)
You can, if you like, post your opening creditors and debtors as individual bills and invoices, just like you would do for invoices posted during your accounting year, dating them as at their actual dates.
Do be careful with the VAT though. If you're cash accounting for VAT, you need to enter these invoices with VAT on them as you would normally do. BUT if you're invoice accounting for VAT, then you need to enter the gross amounts but set VAT as 0% - otherwise you'll account for the VAT twice.
For example, if you've got a sales invoice of £575 to post:
Cash accounting for VAT:
Net - £500
VAT - 15% (FreeAgent will work this out as £75)
Gross therefore £575
Invoice accounting for VAT:
Net - £575
VAT - 0%
Gross therefore £575
The other point to note is that when you do this, you'll have entries in the Sales and Purchases accounts which belong to last year. You'll need to journal these out.
I'd suggest if you do want to go by this route, you let me know and I'll talk you through that bit separately?
Kind regards,
Emily -
Inappropriate?Hi Emily
Can I just tag my question on to the bottom of this thread please?
I am having a problem balancing my clients VAT account. I have gone back in time and entered all transactions from the start of their accounting year (01/03/09), and then input opening balances for debtors, creditors, VAT liability and CT liability and the retained profit from their finalised accounts for the last year. However, a payment has now been received for £398.14 from an opening debtor. This amount is actually £382.66 presales and £15.26 VAT.
I have reconciled the £382.66 in the bank account as receipt from an initial debtor, this leaves £15.26 unexplained (the VAT element). How do I explain this £15.26 so that the VAT account is correct and fully reconciled?
Hoping this makes senses
Cheers
Emz
I’m dippy!
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Inappropriate?Hi Emz,
You'd need to explain the full amount (£398.14) as a receipt from an opening debtor. (That's because the double entry when a payment is received against an invoice is DR Bank, CR Debtors.)
If your client is cash accounting for VAT then they would need to post a journal to account for the VAT so that it appears on the return - in brief, this would be CR VAT Charged, DR VAT Deferred. Do let me know if you'd like a full walk through this.
If your client is invoice accounting for VAT, on the other hand, this VAT will of course have appeared on a previous VAT return so no journal is needed.
Does that help, please?
Kind regards,
Emily -
Inappropriate?
Do be careful with the VAT though. If you're cash accounting for VAT, you need to enter these invoices with VAT on them as you would normally do. BUT if you're invoice accounting for VAT, then you need to enter the gross amounts but set VAT as 0% - otherwise you'll account for the VAT twice.
Eek, I nearly made this mistake. I've deleted the bills and done it under an opening balance. Suggestion: a warning if you add VAT >0 transactions in a previous financial year to the FreeAgent start date? -
Inappropriate?Hi Ashley,
Thanks for the suggestion, I'll add it to the list for discussion.
Kind regards,
Emily
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