amending a suppliers balance?

[sbrown1264]

Hi

We have been using Sage for this financial year, previously using QBD, also previous bookkeeper made a mess and has now left! i took over this financial year and didn't enter any opening balances, we are waiting for these figures from the auditor. i entered opening balances for 2 suppliers (2 directors) for the purposes of making a payment to them, which leaves a balance o/s of £4000. The auditor has come back and said that he has found that they are both owed an extra £10000 each which the directors have now taken (£14000) how do i enter the extra £10000 each?

Regards
Stephen

[brucedenney]

You post a bank payment of £10000 to each of them against the nominal code.

Not sure why you entered an opening balance, you would normally just pay them the £4k against the nominal code in the first place.

The only time an opening balance entry would be needed is if there was an adjustment by the auditors to the previous year.

[sbrown1264]

The 2 directors own other companies and invoice in to this company for their services. The previous bookkeeper had made many errors and when I took over I stated I would not enter any o/bs until the auditor had finished the year end, which he is still processing. He has now said that instead of £4000 been o/s to these 2 suppliers it is £14000. One of the directors will make the payments to himself and the other director (not happened yet) just not sure how to enter the payment without affecting the VAT and P&L.

[brucedenney]

Okay, so there is not 4000 outstanding there is £14,000

So set up a supplier account for each of the directors, pay them the money and get the invoices off them.

The invoices will need to be coded to a nominal code for their supply.

This is unusual, most directors do not invoice for their services, they take a dividend from the company and so avoid paying national insurance contributions on their earnings, in which case things are done very differently.

[sbrown1264]

If I post 2 dummy invoices, this will affect VAT and P&L. The 2 directors own other companies and invoice in to this company for their services. The previous bookkeeper had made many errors and when I took over I stated I would not enter any o/bs until the auditor had finished the year end, which he is still processing. He has now said that instead of £4000 been o/s to these 2 suppliers it is £14000. One of the directors will make the payments to himself and the other director (not happened yet) just not sure how to enter the payment without affecting the VAT and P&L.

I initially entered 2 o/b of £4000 which was then paid, so both accounts now show as zero. As I said the previous bookkeeper has made a right mess of the accounts, that is why I have not entered any o/bs yet until the auditor supplies them to me.

[brucedenney]

Payments to suppliers do not affect the P&L or the VAT, it is the invoices that do that.

Entering a £4000 o/b entry to make directors drawing "disappear" could be a problem, if they were invoiced in the previous year, then that invoice should be in Sage outstanding and ready to pay. If the invoice is not un the system then this is just a payment on account.

For now you can pay them the money against their supplier account even if you do not have the invoices yet.

Until they produce the invoices, their supplier accounts will have negative balances.

You should not post dummy invoices, you should post the real invoices from the directors later until then, they "owe" the money to the company.

When they produce the invoices, then the VAT will be accounted for and the cost will be allocated to the P&L.

I would reverse your earlier o/b entry and make it all payments on accounts against their supplier accounts.