Need Help! How do I and Manager record this entry?

Hi all,

I’m hoping someone can help me understand how Manager has operated in a particular way.
I know this is basic accounting but I’m trying to work in out and failing…

The story is as follows:

  1. I started using Manager from October 1st 2017.

  2. I created a sales invoice for a customer and dated it when the work was done - in late September 2017 (before I started using Manager) - and I credited my Direct Debit income account in the invoice.
    (Manager then puts amount into Accounts Receivable)

  3. In October, the customer pays, not into my bank account, but gives me the amount in cash.

  4. In Manager, I open the September invoice, click on receive money > cash.

  5. I deposit the received cash into my cash account, and in the same ‘receive cash’ transaction, I credit the following accounts:
    Accounts Receivable > Customer > Invoice # xx.

  6. The invoice is now paid and balanced, and Accounts Receivable has been credited the correct amount, wiping out that Acc Rec entry.

My question is: What has happened to the amount back in step 2 that was credited to my Direct Debit income account?

I’ve been maintaining a set of physical books too since I started the business not so long ago, and don’t actually know how to write this apparent reversing entry into them.

For example

In the month of September 2017:

I invoiced the customer, then in my books I debited Acc Rec, credited Direct Debit income.

I later closed off the month of September.

In October, I received the cash payment instead of the Direct debit bank payment, so I thought maybe in my books I should:

debit Direct Debit Income
credit Cash Income
debit Cash Account
credit Accounts Receivable

However when I do this my October total cash income is higher than it should be because it includes the amount received in cash for the previous month of September.
But then I get confused and think, isn’t that then wrongly showing the amount earned in September as being earned in October?

I’m majorly confused… :worried:

If anyone can help please that would be greatly appreciated!

Many thanks,

Jonathan

my question would be why did you make a payment receipt when you have not actually received any.
you should be entering a receipt only when you actually receive the money.
according to what you said you are receiving the money twice resulting in wrong accounts.

This raises two questions. First, did you set a start date? Since you were keeping records in another system previously, you should have. Manager will ignore all transactions prior to your start date except invoices, which are used to set the starting balance of Accounts receivable and Accounts payable. In your case, see this Guide: https://www.manager.io/guides/5494.

The second question is why you are crediting sales to an account with a name like Direct Debit? Is this, in fact, an income account in your chart of accounts, but with a nonsensical name?

If you did as you described, it should still be there. But your description was not detailed enough to know for sure. Is it not there?

Why do you think you need a reversing entry? You should close out your previous books. Doing so will leave balances in some balance sheet accounts. You should create matching starting balances in Manager’s accounts. This should only involve balance sheet accounts, not income accounts. Additionally, the deposit to your cash account was not income; it was settlement of the Accounts receivable balance. The income was recorded by the sales invoice. When that income is recognized depends on whether you are using accrual or cash basis accounting. Manager can handle either, and you did not say which you are using. See this Guide: https://www.manager.io/guides/7129.

Under Summary tab - Set Period are you using Cash or Accrual Basis.
If Cash Basis, then when receiving the payment this creates the income.
Invoice in September, paid October becomes October income.

With Accrual Basis - Invoice in September, paid October remains September income