HOW DO I RECORDDEBTORS & CREDITORS OPENING BALANCES INTO RECKON ACCOUNTS

How you record opening balances of Accounts Payable and Accounts Receivable into Reckon Accountsdepends on whether the client is Cash or accruals for Taxation purposes and also whether they are Cash or Accruals for GST purposes.

If Cash for Taxation and Cash for GST:

1:Enter Accounts Receivables through Invoices and enter Accounts Payables through Bills.

2:Record the Invoices exactly as you would a normal Invoice and enter the bills exactly as you would a normal bill. This means that you will choose the usual Invoice Item, or Expense account and the usual Tax Code.

  1. Date the Invoice or the bill the correct date of the invoice eg. 10.06.07 and it will then be in your system ready to record a payment to it once you receive or make the payment after the 1st of July.

If Cash for Taxation and Accruals for GST:

1.Enter Accounts Receivables through Invoices and enter Accounts Payables through Bills.

2:Record the Invoices exactly as you would a normal Invoice and enter the bills exactly as you would a normal bill EXCEPT DO NOT RECORD ANY TAX CODE. This means that you will choose the usual Invoice Item, or Expense account but a blank Tax Code for every invoice and every bill.

  1. Date the Invoice or the bill the correct date of the invoice eg. 10.06.07 and it will then be in your system ready to record a payment to it once you receive or make the payment after the 1st of July.

If Accruals for Taxation and Accruals for GST:

1.Enter Accounts Receivables through Invoices and enter Accounts Payables through Bills.

2.Create an Item called “Opening Balance”. This item needs to be an “Other Charge” item. It needs to have no (blank) default tax code and to be linked to the “Opening Balance Equity” Account.

  1. Record the Invoices exactly as you would a normal Invoice and enter the bills exactly as you would a normal bill EXCEPT DO NOT RECORD ANY TAX CODE AND DO NOT RECORD THE USUAL INVOICE ITEM OR ALLOCATION EXPENSE. Instead use the Item you have created called “Opening Balance” for ALL invoices and for ALL bills choose the “Opening Balance Equity” account as the Allocation account. Use a blank Tax Code for every invoice and every bill.
  1. Date the Invoice or the bill the correct date of the invoice eg. 10.06.07 and it will then be in your system ready to record a payment to it once you receive or make the payment after the 1st of July.

If Accruals for Taxation and Cash for GST:

1.Enter Accounts Receivables through Invoices and enter Accounts Payables through Bills.

2.Create an Item called “Opening Balance”. This item needs to be an “Other Charge” item and to be linked to the “Opening Balance Equity” Account. It needs to have the default Tax Code as GST.

This is assuming all the clients sales contain GST. If you are with a client that has some GST sales and some GST Free Sales ie. Medical or Education Industry client then you will need to set up two items – one called “Opening Balance with GST” with the default tax code set to GST and one called “Opening Balance – GST Free” with the default tax code set to “FRE”.

  1. Record the Invoices exactly as you would a normal Invoice and enter the bills exactly as you would a normal bill EXCEPT DO NOT RECORD THE USUAL INVOICE ITEM OR ALLOCATION EXPENSE. Instead use the Item you have created called “Opening Balance” for ALL invoices and for ALL bills choose the “Opening Balance Equity” account as the Allocation account. You will need to use the correct Tax Code however in this scenario for every Invoice and every bill.
  1. Date the Invoice or the bill the correct date of the invoice eg. 10.06.07 and it will then be in your system ready to record a payment to it once you receive or make the payment after the 1st of July.

EXPLANATION

The reason for the differences in each scenario is because of the following:

-In a client who is Accruals for Taxation the expense or Income will already have been included in the past financial periods Taxation figures. Therefore we DO NOT WANT TO DOUBLE UP ON THESE INCOME AND EXPENSE FIGURES so we must simply have the Income or Expense going directly to the Balance Sheet (Opening Balance Equity) and NOT affecting the Profit and Loss.

-In a client who is Cash for Taxation the expense or Income will NOT have been included in the past financial periods Taxation figures. Therefore we DO WANT THESE INCOME AND EXPENSE FIGURES TO BE INCLUDED IN THIS PERIODS FIGURES. To do this we must record our Opening Balance Invoices and Bills to the correct Income or Expense account so that after they have actually been paid that the figures will be included in a CASH BASED Profit and Loss for the current period/year.

-In a client who is Accruals for GST the GST will have already been included in the past financial periods BAS figures. Therefore we DO NOT WANT TO DOUBLE UP ON THE GST. We must therefore not record any GST code (Blank code) in the Opening Balance Invoices or Bills.

-In a client who is Cash for GST the GST will NOT have been included in the past financial periods BAS figures. Therefore we DO want them to appear in the CASH BASED BAS of the current period once they are actually paid. We must therefore record all Opening Balance Invoices and Bills with their correct GST code.