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Denise


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Help with opening balances.
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Hi all,
Please could anyone help with the following problems:

I received an opening trial balance from my clients accountant and amongst these figures was an opening amount  of £500 for one of his customers.  This was actually paid by cheque and banked at the end of the previous month so therefore I don't think there should have been an opening balance at all.  This cheque then bounced at the beginning of the new financial year but was then paid by cash. I need to take the bounced cheque payment off the customers account to make the bank account balance, but that then leaves the customers account showing as still owing £500 which it does not. I hope this makes sense.

Also the opening bank account figure was the same as the bank statement figure and did not take into account 2 uncleared  cheques which cleared the bank at the beginning of the financial year but there was no opening creditor balances for these so hence I have nowhere to post the payments. I posted these to the suspense account in order to reconcile the bank account but I really need to sort this out as I know this is not right. Any ideas??

I think I should just have a word with the accountants as I think all this should have been accounted for in the opening balances. But I thought I would ask on here first as maybe someone may have a suggestion.

Sorry for the long post



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Denise
www.niftynumbers.co.uk
semsley


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OK

The customer account should have an O/B because the cheque bounced so at the beginning of the new financial year customer was a debtor owing the £500.  To clear the customer account you need to dr the cash account and cr the customer a/c.

Re the creditors - the best thing would be to ask the accountant who they were/what the supplies were or expenses.  Failing this post to purchases account.



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Denise


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Thanks for your reply Semsley but I don't think I have explained myself correctly.

The opening balance of £500 I have been given is for the invoice not the bounced cheque, as the cheque was not represented until the 2nd of the month and bounced for the final time about the 4th. So after I have debited customer and credited bank for the bounced cheque and then debited the bank and credited the customer with the cash he subsequently paid about the 6th the account is still showing as owing £500. If i don't do this the bank statement does not balance. This is why I don't think there should be an opening balance for the customer at all.

With regard to the creditors I do know who they are and they are purchases for resale, but as they relate to goods bought in the previous year would posting them to purchases not overstate the purchases for this year?

Think I need to go have a lie down, my head hurtsfrustrated.gif

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Denise
www.niftynumbers.co.uk
semsley


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Are you doing this manually or using an accounting program, if so which program?

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semsley


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The bounced cheque should contra itself out of the bank account ie paid in/paid out x 2 (4 transactions) negating the payments and leaving the customer with the o/b or invoice for the £500.  Then the cash payment dr cash cr customer a/c should balance the customer account.  If you have an o/b and the invoice do a dummy cr note to clear it out.

For the creditors if you know who they are put the amounts as o/bs on the supplier accounts then the purchases won't be overstated.



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Denise


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Hi Selmsley

Thanks for your help on this, I am using Sage Instant but previous to this financial year it was done manually (not by me).

The cheque has been paid in and out twice but was originally deposited at the end of last year and bounced the beginning of this year. So I think I will go with your suggestion to do a dummy credit note.

If I put opening balances on the supplier accounts, won't I end up with the double entry in suspense.

Please feel free to hit me with a hammer and chisel !!!biggrin.gif

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Denise
www.niftynumbers.co.uk
semsley


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Using Sage, yes you will, it will debit it.  So you need to credit suspense and debit creditors control.

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Denise


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Ahhh, yes of course.

Thank you very much.

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Denise
www.niftynumbers.co.uk
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