Cash Management

[megatron]

Hi there!

We are running a small business. Our company has different kind of services in which we pay cash in advance on behalf of customers (services like Visa Charges etc.), After that Our accounts department pass the entry credit cash and debit the concerned customer. Later on they make the invoice for above alongwith other services like Air Tickets.

The problem is, while we post it on ledger how do we manage cash and customer? Because in the above scenario It will post both entries

1. Entry from Voucher
2. From Invoice

Resulting customer will debit twice in ledger.

Plz help!

[shafiqb9]

while entry from voucher you should first debt agency from whom you are going to arrange services for customer and do not debt customer as your given advance to agency.

and when you make sale invoice it means that you have purchased from the agency so you credit the agency and debt the service you have purchase.

in customer ledger you should not first debt it (from voucher) that is no entry at that time.

and when you make sale invoice that time debt customer and credit sale.

hope it help!

[megatron]

Dear Shafique!

Thanks for your reply. If I go with your above advise then how do I reconsile that which services we are buying for which customers.

In this case we have to put customer name in the naration of voucher at the time of debit the agency in voucher and then reconsile it on daily basis.

Here our management want if we withdraw the cash from company's A/c it must be posted in the ledger account of particular customer.

Thanks.

[Zaheer Iqbal]

you should treat it as follows

Agency Account to whom you give advance is Debited (i.e your purchase)
Credit Bank Account
with a narration of the customer on whom behalf you have given advance

at the time of receiving Visa from agency you should pass the following entry

Debit bank ( the amount received from your customer)
Credit Visa service / Sale

The difference between the payment made by you to agency and payment received from custmer will be charged to your profit and loss account