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Am I doing this right?


#1

Hi I am a small retail business. We do not have the facility to monitor VAT on sales. SO previously we have been using the method were the proportion of VAT spent on purchases is applied to sales.
So each week I enter in cash register takings the total cash taken then the card payments and leave the VAT as zero.
We also pay suppliers in cash. SO for this I use petty cash as money out and note the VAT paid on an invoice for each transaction… As I pay one of my employees in cash he also gets an invoice paid from petty cash.
Often we have a difference between cash in , and that paid to suppliers which is deposited into our bank account. as cash.
This is tagged via our bank feed as general sales. with no VAT applied as we have no method of doing this.
Does that seem all in order.
This is all new to me so can someone explain why in our bank accounts the petty cash is showing a positive amount even though all has either been paid to a supplier or paid into our bank account. Shouldn’t there be some way to show that excess cash from the petty cash has been deposited into the bank account?
Am I missing something here?
Thanks for your help


#2

No, you would normally tag cash deposited at the bank as a “bank transfer between accounts”, from petty cash to current account. The cash register tool has already accounted for the sales, so by tagging the cash deposits as sales you’re double-counting that portion of your income.


#3

Ahh thanks Ian that makes sense do I also do the same with the card portion of our takings. I have previously created a bank account for our card provider so been tagging those payments when they appear in our bank feed as transfer from First direct ( our card provider) .Do I tag those payments also as transfer between petty cash and bank account.
Many thanks


#4

The cash register tool will be logging your sales as two payments into petty cash for the cash sales, and “first direct” (or whatever you called the merchant account for your card provider) for the card sales. So when the card payment money arrives in your current account a few days later that would be a transfer from the “first direct” account to the current account, and that sounds to me like what you’re already doing.


#5

Great, thanks Ian :wink:


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