I’m entering the data for my partner’s first 6 months of trading and I’m unsure of the best way to input the sales. She has a combination of cash and card sales so I had created income accounts for both which I can then use to allocate the payments into the bank. However she has pointed out to me that she wants to know what day it was taken, not banked. The card sales are marked as such anyway but the cash sales at present are only identified by the banking date.
The way I see it I can either change the dates of the transactions to the sales date and make the ‘cleared’ date the date it appeared in the bank or else I can create new transactions for the actual sales date going from ‘cash sales’ to ‘cash register’ and then edit the exisiting bank transactions to be from ‘cash register’ to the bank.
The only complaint my partner has with these methods is that they give two figures for each date (cash and card sales) and I wonder is there a more elegant way of doing this that would give me a single ‘sales’ figure for each trading day which could then be broken down into cash and card when it’s banked. I don’t see any way of allocating income accounts to transfers between cash and bank accounts. Should I simply use a descriptor to id the cash and card sales rather than an actual income account?
Apologies if my question demonstrates a degree of ignorance. I am trying to figure out as much as I can with the guides and accountingcoach but this issue has me perplexed.
I think a better practice would be to create income accounts to reflect the type of income, such as service sales, product sales, maintenance sales, and so forth, rather than the method of payment. Payment method is handled when you designate where the money is received, regardless of what type of sale it is.
Cash sales should be entered on for the date transacted. By definition, they are cash, so no bank account should be involved. If you move funds from a register or till to a bank account, that should be entered as a transfer on the date it is effective, not as income of any kind. No income has been earned. You’ve just moved money from one pocket to another.
To look at total sales, look at the income accounts, not the bank or cash accounts. That should give you what you need, if I understand you correctly.
The business only has one type of sales so that simplifies that side of things.
Is there anything inherently wrong in recording all the sales into the register as ‘sales’ and then recording the card payments as a transfer from the register to the bank on the day they cleared? That way my partner can see the daily sales figures as one line rather than two income transactions per day covering the card and cash payments to the bank and cash accounts respectively.
When you say that the payment method is handled when you designate where the money is received, do you simply mean that cash will go into a cash account and cards into a bank account? Or do you mean something more specific?
My opinion is that this would not be good accounting practice, because it will misrepresent the bank and cash account balances, possibly for a considerable period of time. It could also make it difficult to track down errors or omissions later on. And it would create transfer entries that cannot be reconciled with a bank statement, because they never actually occurred.
I see two better ways to obtain daily sales summaries:
In the Summary, click on the Sales (or whatever you name it) account balance. Export the result and import to a spreadsheet, where you can manipulate it as you desire.
Also in the Summary, set the period from yesterday’s date through today’s date. You will see a summary for today’s actions, including the one-day sales total. Be sure to set the period back to your normal period when finished.
You can also create a Profit & Loss Statement under Reports for the period from yesterday through today.
Can you just clarify one thing for me though? When you say that
[quote=“Tut, post:4, topic:4074, full:true”]it would create transfer entries that cannot be reconciled with a bank statement, because they never actually occurred.
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do you mean because they were payments (from the card processing company) not transfers? The relevant sum will have entered the bank account on the day I would put as the ‘cleared’ date, but coming from the proc co not the cash register account. Is this something that would confuse the reconciliation process if I’m importing the bank statements?
I can see your point about accuracy so I will follow your suggestion but I’m just trying to tunderstand how the reconciliation process works and what issues would trip it up.