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Allocating cash purchases

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Office1
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Allocating cash purchases

Post by Office1 » 05 Jan 2021, 14:09

Happy New Year to you.

Can you please advise me on the following. How do I record a VAT receipt / invoice if paid for in cash. If I enter it as an invoice I should therefore see a corresponding transaction from the bank but it may have been paid with cash from a previous withdrawal. I wish to enter the invoice as to claim VAT back for the purchases. How would I allocate a payment to the invoice ?

TIA

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brucedenney
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Re: Allocating cash purchases

Post by brucedenney » 05 Jan 2021, 14:41

Enter is as a Bank Payment.

The problem is that is this transaction has already gone through the bank (paid form a previous withdrawal) then this will mess up the bank rec, so if this is the case, you need to go back and find the original transaction in the bank, reverse it and then, you can reconcile the reversal of the old transaction to the new one.

I wonder if the scenario you are describing, taking out cash and then buying stuff with it, might be better managed by using the petty cash bank account, you take money out of the main bank and put it in petty cash with a bank transfer and then make bank payments to use up the cash in the petty cash. The petty cash bank account can be reconciled to the amount of cash in hand so a little more control.
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Office1
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Posts: 32
Joined: 16 Jan 2020, 12:05
Sage Version: Other

Re: Allocating cash purchases

Post by Office1 » 05 Jan 2021, 14:54

Hi,

I think you could be right about petty cash. Although I know the owner uses another credit card linked to another account which I dont have access to quite annoying. Must have a word.

Thanks again.

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brucedenney
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Re: Allocating cash purchases

Post by brucedenney » 05 Jan 2021, 18:46

If there is a credit card as well, then you could set up a bank account for the credit card.

You could set up a Supplier called "David Expenses" and post the expenses to it as invoices, you could then pay this with cash from petty cash or a bank transfer/cheque to David.

You could post the "Expenses" (which could be a sheet covering the month with all the paperwork stapled to it) as a bank payment

There are lots of ways to do things, none are right or wrong, each has it's pros and cons.
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