Thanks for the additional information. I think I understand the problem, but also see some other issues:
Did you actually take money from a company account to pay yourself? If so, using the Spend Money function in the appropriate cash account was the right thing to do. This would be correct, for example, if you bought the stamp from yourself. But if you transferred a personal stamp to the company without receiving money from the company, the correct way to handle it would be as an expense claim, still allocating the transaction to
Likewise, if the travel expense was actually something purchased from yourself, what you described was correct. But it is difficult to imagine purchasing travel expenses from yourself. I suspect this was, instead, something like personal car mileage (31 miles at the current IRS rate). If so, the way to handle allowances that are legitimate, deductible business expenses but for which no money changes hands is as expense claims. Again, an expense claim for mileage would still be allocated to
Yes, I mistyped because I was thinking about the expense claims topic I covered in the paragraph above.
Now back to the 0.01 problem:
The procedure you described for creating Invoice #13 is correct and would have generated the invoice you showed. What it would not have done is create the entries in your screen shot of the drill-down on billable expenses from the
Summary. Creating the sales invoice as you described would generate two entries in the drill-down list:
- -16.74 on 5/12/2016
- -0.47 on 5/12/2016
Neither entry appears, but dual entries for different amounts on the dates money was received were generated instead.
The answer to your problem lies in how those entries were created. Because you are using cash basis accounting, Manager substituted those transactions for the “real” ones. The fact that if you switch to accrual the problem goes away shows that Manager remembers the correct transaction. But under cash accounting, Manager “extracted” enough of the receivable to absorb the payment and allocated the payment proportionally across all line items on the invoice, leading to rounding error. Depending on amounts involved, the same thing could have happened to billable time. In this case, it did not. Had Ebersol paid in unequal installments, you might never have seen the problem.
The procedures you described for receiving two payments from Ebersol are also correct. And they did, in fact, result in Invoice #13 being paid in full.
A lesson from all this is that cash-basis accounting cannot always show the completely correct position and performance of a company. Important control accounts, like
Accounts receivable, disappear. But when partial payments are made, something has to be done, and problems like this crop up.
You could get rid of the error via a journal entry, transferring it owner’s equity or a capital account, depending on your form of organization and your chart of accounts.