I have been working hard at my model entries for aggregation of amounts transferable (but yet to be transferred) from trust bank account to office or operating account, giving credit to customer upon allocation of an amount to the office adjustment trust ledger account, with transfers every few working days or whenever convenient of amounts from trust bank account to office (operating) bank account.
(I’m probably not explaining this too well!)
I work on the following plan:
The general set up for the trust account is:
Dr Trust Bank Account [asset]
Cr Clients’ trust money – general (special acct with subsidiary individual trust ledger accounts) [liability – although holding money in trust for someone is not quite, legally, a simply liability or payable, in solicitors’ and lawyers’ trust account arrangements practically everywhere, it is treated as if it simply is a sum payable]
(The significance of a ‘general’ bank account for the trust money held for several clients – or hundreds of clients – is the the lawyer-trustee is ‘mixing’ in the one bank account the trust mone of all clients together, which trust accounts legislation enables the lawyer-trustee to do, and which the law of trusts otherwise would not permit. The law of trusts otherwise would really seem to require a separate bank account for each client or each trust. Mixing of the trust money of all clients in one account is very convenient for small amounts intended mainly to be security for the lawyers fees, or for larger amounts to be dealt with within a few working days, such that separate income-producing investment is not called for – say the purchase money requirement for the completion or settlement of the purchase of a property scheduled for a few days after receipt of the trust money from the client.)
For aggregating amounts transferable from the trust bank account to the office account for debtor invoices issued to clients …
Dr Mr ABC (client) – trust ledger acct
Cr Office Adjustment – trust ledger acct
Dr Office Adjustment Notional Bank Account (which facilitates issuing of receipts) (but which is not a real bank account)
Cr Mr ABC (client) – accounts receivable / debtor invoices
And on transfer, say, every few working days of balance of Office Adjustment – trust ledger account, from Trust Bank Account to Office (Operating) Bank Account…
Dr Office Bank Account
Cr Trust Bank Account
Dr Clients’ trust money – liability account (the credit for the total in the trust bank account the balance of which is the sum of the balances of the individual clients CR trust ledger accounts
Cr – Office Adjustment Notional Bank Account (by payment made to [say] Mr Write Off)