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Petty Cash Balance

Good morning
I have recently taken over a pen and paper accounts system and converted to QF which has proved quite straightforward.
There is petty cash and I set up a petty cash account with an opening balance. But when I enter a purchase using petty cash, the balance goes up instead of down?
I’m obviously doing something blatantly wrong but I can’t figure out what?
Any help would be much appreciated.
Thanks
Ali

Are you sure the figure going up doesn’t have a minus next to it? As in its a negative value?

How are you “entering a purchase”? You don’t use “petty cash” as the purchase category, you need to create the purchase record exactly the same as you would for a purchase paid from your current account (with the appropriate purchase category for the thing you bought, whether that’s general purchases or something else) but then log payment from the petty cash bank account.

Yes that’s what I’m doing - entering a purchase from eg The post office then saying paid via petty cash.
When I look at bank management, the petty cash account doesn’t show the opening balance that I set up when I first started.
When I look at the journal, it shows the opening balance in petty cash of £70.34 which is correct, but the petty cash account only shows the purchases I’ve made and therefore a minus amount.
I’m sorry, I’m not explaining this very well :frowning:

Hi @AliH

If the nominal codes are the same (petty cash, by default is code 1230), it’s worth double checking the date of the open balance to ensure it is before the date of the transactions.

Yes I’ve checked the dates.
I have just started using QF but the start date is from 01.11.19 and entered everything from then.
It’s giving me a headache!

This is the screenshot of the journal - I’ve removed this

Thanks for the screenshot - that’s really helpful!

Your journal is both crediting and debiting the same nominal, so the overall effect is zero.

Where did the money come from, prior to QuickFile? Were you using any other software before QuickFile?

I have taken over as treasurer and the previous one used pen and paper.

I presume the cash came from the current account a long time ago!

So its likely to be part of the previous years retained profit? if so, then that will be your balancing nominal to use in your journal entry.

We are a non-profit making organisation - does that make a difference?

If it’s going to be awkward, i might just keep petty cash in pencil and paper!!

Ali

It’s not awkward, we just need to establish where the cash came from and you need to adjust the opening balance journal to reflect that.

Only you know where the money came from. As we arnt part of your business.

If your non profit, it could be retained capital, or retained earning. We simply don’t know. You’d have to work thaf out.

Ok thanks - I’ll sort it.

Your help is much appreciated

Ali

Ali,

This is quite fascinating. I’ve just spent two hours digging through my nominal ledger reports to work out how this works. I think I have the right answer now, but possibly I’m wrong, if so I don’t doubt someone will tell me.

A little bit of history. When I was an undergrad I was treasurer of one of the University shooting clubs. Our accounts went back so far that they began in £sd, before decimalisation. Everything was done in a delightful old bound ledger, manually. I was, in fact the first treasurer to use an electronic calculator. We used manual double entry with one page being credits and the facing page debits. The first two columns were “cash” and “bank”, then there were columns for various headings such as subscriptions, ammunition, hire of the range, competitions and so on.

The point was that every transaction was entered on both pages, so it was both a credit and a debit. A subscription received was a credit in the subscription column, so it had to be a debit in the bank column on the other page. This meant the cash and bank columns were minus the actual amount of cash we had and minus our bank balance. Because of this a very quick check for errors was simply to add up all the amounts on each page and they should balance.

As far as I can see QuickFile does the same thing internally. Picking out one odd purchase from my accounts I have the bank paying out £45.61 to a supplier. Pulling the detailed nominal ledger report I find that the nominal ledgers involved are:

2100 CR 45.61 (This seems to be creditors)
2201 DR 7.60 Purchase Tax Control Account
5000 DR 38.61 General Purchases

What is happening is that down in the depths there are some nominal ledgers on which entries are being passed which are contra to the bank account entries. This could explain what is happening if you are looking at a contra account.

Looking at other replies the trick seems to be to set up petty cash as a “bank account”, rather than a nominal ledger. Then QF will pass the contra entries on an almost invisible internal nominal ledger and everything should work.

I’ve been wondering how QF actually did this to get the audits to come out right, and your query has finally pressed the trigger for me to dissect the nominal ledgers and see how it works, so thanks.

Hope that helps,
Robert

That’s all great. But that’s not what’s happening here.

When you start a new book keeping software after years of using either manual methods or other software. You will have opening balances. I.E amounts carried forward from previous years.

An amount left over from one year could be money owed, or retained profits as an example.

When you start a new peice of software, if you don’t enter what those opening balances relate to, then it will need to pick something to contra it against, which is why we have a suspense account. It’s an account used to balance everything when you don’t have the correct matching entry. Suspense account must always be 0, if it isn’t, you know something doesn’t balance.

Thank you.
I took over a pencil and paper ledger so I’m glad QF is so straightforward.
I think I’ve sorted it - I’ve marked it as misc income which I’m still wondering if this is correct for our accounts, but it seems to have worked and is easy to change again if I have a re-think.
Cheers

Thank you.
I have it sorted in my head now, but just deciding where I allocate the opening balance.
But, it’s so easy to change that I’m not worried about it and I’ll discuss it with the committee.
oh what joy!!! :slight_smile:
Cheers

I would advise against marking it as Misc income, if its a balance carried forward from a previous year, then it wouldnt be income twice. You wouldnt want to be charged tax twice. It will of course balance doing it this way, because its balanced the payment in (dr) with income (cr).

If it were me, id place it under retained earnings.

Thank you - yes you’re right that would be better.

So when I go to change the journal, there isn’t a nominal code for retained earnings - there’s 3101 retained profit and undistributed reserves - is that the same thing?

Sorry to be a pain!

Ali

Yes it’s the same. Sorry when you said you was non profit I automatically thought of the alternative to retained profit for non profit companies. But if you have that, that’s fine too.