Extended Trial Balance in reality

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Londina
Londina Registered Posts: 814 Epic contributor 🐘
I know maybe this could sound a silly question, but I'm so used to computerised accounting system and when I suddenly have to deal with manual accounting on an extended trial balance in excel, I get lost!! cannot remember almost anything about the DFS days...

A Ltd company has provided me with these amounts:

Income £20,000
Expenses £70,000
and the bank statements which I manually add up all receipts (£93000) and payments (85,000).

So, when it comes to post on the ETB:
CR Sales 20000
DR Bank 93000
CR ?
here I don't know what to post, I would put Debtors, but they don't debtors as they sell everything online. Part of that 93000 has Sales included, plus other receipts (loan, shares, refunds, etc).

For the payments, it's the opposite:
DR Expenses 70000
CR Bank 85000
DR Creditors 15000
but again I am not sure if it's the correct posting, look like they spent 15000 extra or something else!!

OMG I'm so confused, maybe the answer is so simple, but at the moment I cannot think straight!

Comments

  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    Are you sure you know what you are doing?

    you don't have to use an ETB.

    why don't you get a trial balance from your client and upload it on a computerised accounting package and then make any required adjustments. It will do the double entry for you.


    Londina wrote: »
    So, when it comes to post on the ETB:
    CR Sales 20000
    DR Bank 93000
    CR ?
    here I don't know what to post, I would put Debtors, but they don't debtors as they sell everything online. Part of that 93000 has Sales included, plus other receipts (loan, shares, refunds, etc).

    when I read the above figures, I found it very intriguing. If you assume that all the credit on the bank statement is sales and it comes to £93000; then sales has to be £93,000 or more if the debtors have increased; or less if the debtors has been reduced. But a gulf of £73,000 is seems like an ocean.

    why are you crediting £20,000 income to sales and debiting £93,000 to Bank?

    I can not solve this puzzle. This accountant has definately lost his balance!

    the information provided in your OP is incomplete
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Agreed, there are too many missing pieces of information to make any assumptions based on what you have posted.

    Is the bank reconciled? How have they explained the discrepancies? As a Ltd Co they have a legal obligation to maintain proper accounting records (yes, I know, we wish they all did!) so is there a TB?
  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    Many thanks for the replies
    sdv wrote: »
    Are you sure you know what you are doing? you don't have to use an ETB.
    why are you crediting £20,000 income to sales and debiting £93,000 to Bank?

    I can not solve this puzzle. This accountant has definately lost his balance!
    the information provided in your OP is incomplete

    heheh definately I have no balance left on me ;-)

    Anyway, the client didn't provide a TB, that's why my boss requires me to do a ETB. I only have a list of incomes and expenses and the company bank statement, that's it.
    In the ETB I put Bank DR 93000 because it's money received, but I'm confused where to post Sales (which should be CR, but then also CR "Debtors" because reduce the money still have to be received!). I think there is an extra entry, but I don't know where is it and how to post it.
    Monsoon wrote: »
    Agreed, there are too many missing pieces of information to make any assumptions based on what you have posted.

    Is the bank reconciled? How have they explained the discrepancies? As a Ltd Co they have a legal obligation to maintain proper accounting records (yes, I know, we wish they all did!) so is there a TB?

    Exactly, I wish this obligation was enforced!! The bank is not reconciled, well I add up all the transactions, I got the figures of payments and receipts by doing that.
    There is no TB, I have to create one, that's the problem.

    Aaaarrrggg never accept clients that don't use a double entry system for their accounts or even better, a computerised system!!
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    Londina wrote: »
    Aaaarrrggg never accept clients that don't use a double entry system for their accounts or even better, a computerised system!!

    But that's the challenge! That's why you study AAT and ACCA. Otherwise any Tom, **** and Harry can input data and produce a set of accounts and there would be no need to have qualified accoutants.
  • coojee
    coojee Registered Posts: 794 Epic contributor 🐘
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    The first thing you need to do is analyse the bank and find out exactly what each and every transaction is for. Just because they've told you sales are £20,000 doesn't mean that sales actually are £20,000. The same with expenses.

    With plastic bag accounts, the place to start is always the bank account. If you can't find out what a receipt is you assume it's a sale (so that you don't understate sales for tax purposes) and if you can't find out what a payment is for then you assume it's drawings (so that you don't overstate expenses). If the client quibbles about this tell them it's their own fault for not keeping proper records.

    I have to agree with what other posters have said - are you sure you know what you're doing? This is fairly basic stuff that most clerks working in practice will have done hundreds of times.
  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    coojee wrote: »
    I have to agree with what other posters have said - are you sure you know what you're doing? This is fairly basic stuff that most clerks working in practice will have done hundreds of times.

    If I know what I'm doing, I wouldn't be here asking for help!! It's the first time I'm dealing with this kind of situation, usually I maintain the bookkeeping of the companies on SAGE, so it's straight forward when I have to prepare the final accounts!

    We have covered incomplete records on our DFS studies, but to prepare a TB like this from scratch is indeed a challenge!!
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    Have you got an etb template that you are using on excel?

    If so it should be fairly easy and I think you do know what you are doing really you are just panicking!

    As Coojee says find out what the bank receipts are. If they are sales then post to sales - you shouldn't need to post to debtors unless you are running a sales control account (which for a cash business you probably aren't). the expenses should be easier presuming you are not running a purchase ledger control account as well.

    So to start, analyse where all those bank receipts and bank payments have come from and it should be a little clearer. If you want some help off forum then pm me - I do this all the time!!
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
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    The really don't seem to make sense.
  • Bluewednesday
    Bluewednesday Registered Posts: 1,624 Beyond epic contributor 🧙‍♂️
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    PGM wrote: »
    The really don't seem to make sense.

    What doesn't? What I have said or the original query?
  • PGM
    PGM Registered Posts: 1,954 Beyond epic contributor 🧙‍♂️
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    What doesn't? What I have said or the original query?

    Sorry its my post that doesn't make sense. I meant to say the figures from the original post seem a little odd.
  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    PGM wrote: »
    Sorry its my post that doesn't make sense. I meant to say the figures from the original post seem a little odd.

    trust me, they are odd, that's the problem!
  • Gem7321
    Gem7321 Registered Posts: 1,438 Beyond epic contributor 🧙‍♂️
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    Londina wrote: »
    Part of that 93000 has Sales included, plus other receipts (loan, shares, refunds, etc).

    If you know the other receipts are loans, shares, refunds etc. why aren't you posting these accordingly?

    *Confused!*
  • stevef
    stevef Registered Posts: 258 Dedicated contributor 🦉
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    I am finding this chain a bit disturbing, are we really saying that our AAT training leaves us reliant on accounting packages, and if they do not work for some reason we are stuck?

    If we are there is a fundamental flaw in our training requirements. We are supposed to be the experts and we tell software developers what our requirements are, we should not be relying on accounting packages to solve our problems. Personally I do not think the use of any accounting package should be in the syllabus, we should be concentrating on the fundamentals of transactions and the relationships through the accounts.

    The basic ledger at the heart of any accounting system is the cash book - cash is King. The most important accounting process in any organisation is the bank reconciliation. Once you are happy that your bank statements (after adjusting for unpresents and lodgements) agrees to the cash book, a big sigh of relief, and the rest is about moving numbers around to conform with the various rules and regulations in favour at the time.

    How you move the numbers around (manual ledgers, spreadsheets, accounting packages etc) is irrelevant. If you understand your debits and credits, and every time you debit one place, you credit another, you will always balance (the numbers may be in the wrong place, but hey.... at least it balances).

    So, if you have a cash book, carry out a bank rec, if you have not got a cash book, test the bank statements to ensure they are complete and as error free as possible, that there are no other transactions sneaking around outside the statements, and then recreate a cash book. All you have to do then is analyse all the transactions in the cash book, add all your accruals and stock adjustments... and then you can create any account or historical report you want.

    I think I might start a campaign to remove all accounting packages from the AAT syllabus as they only act as a distraction to what accountancy students should be learning. Accounting packages are a tool you use in the workplace as a shortcut. I am proud to say I have never used Sage, we use Agresso, and while I do not know the mechanics behind agresso I do know financial accountancy, I tell the Agresso people what the inputs and outputs from Agresso need to look like not the other way around.

    Rant over!
  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    Gem7321 wrote: »
    If you know the other receipts are loans, shares, refunds etc. why aren't you posting these accordingly?

    *Confused!*

    Infact I will do that, but the overall posting make me confused....

    I know it's crazy, Stevef is right, maybe in the workplace we should concentrate to do things manually first, not using straight away with an accounting software. Suddenly I'm finding myself to not knowing where and how to post things, even if I successfully passed DFS exam!
  • Gem7321
    Gem7321 Registered Posts: 1,438 Beyond epic contributor 🧙‍♂️
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    This isn't DFS this is PLB.

    There are several ways you can go about this, if you know £20,000 of receipts going through the bank are sales you could go through the bank statements and just pick out any receipts that aren't sales and post the journal accordingly.

    Then with the payments if you have already posted the £70,000 of expenses do the same thing and pick out payments that aren't expenses (they could be anything - loan repayments, DLA transactions etc.) and post the journal accordingly. Then you should be able to complete the bank rec.

    OR, you could start completely from scratch and recreate a cashbook from the bank statements also accounting for outstanding items.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    What is PLB? Proper Load of Bollards?! ;)

    I don't think you're at an ETB stage yet, you need a nominal ledger and a TB first. The way I would tackle it is roughly to ignore their sales and expenses at first. Go from the bank, enter the bank into an accounting package or a spreadsheet to get a TB and then match their list of sales and expenses to that. Anything that is in their list of sales and expenses that waasn't from the bank had to come from somewhere else and you end up with a list of queries for the client, and take it from there...
  • sdv
    sdv Registered Posts: 585 Epic contributor 🐘
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    As long as you are just steaming, that's fine.

    This post has been posted in "Members in Practice" forum. There are many things that MIP does that is totally different from what is taught in the class.

    I suppose that the posts here are from MIPs finding difficulties in practice, which other MIPs may have come across and who may be able to solve them. There are many short cuts we use in parctice that would not be advisable for the student members to follow or rely on when demonstrating their competence in the understanding of the accounting principles. These short cuts are used on the full understanding of it's implications on the principle of accounting.

    stevef wrote: »
    ...................are we really saying that our AAT training leaves us reliant on accounting packages, and if they do not work for some reason we are stuck?

    AAT and those teaching AAT are strongly in favour of learning the basic ropes of accouting manually, so that a practicing member is fully competent on how the basic bookkeeping works in mannual accounting and in computerised packages.

    However, in reality, computers and computers software package are here to stay and they are an excellent tools to have. It makes our lives so much easier.

    I don't suppose that over 95% of the currenet student population will have any idea on the accounts were prepared in the good old days when the use of diffrent types of cash book pads were used, and the adding up the columns with a good old calculator printing a list of numbers.

    AAT has to accept the current practices adopted in the industry and change their courses accordingly. AAT has to move with the times other wise the qualification will become a dodo.

    stevef wrote: »
    .................Personally I do not think the use of any accounting package should be in the syllabus,

    Sorry, but I disagree. I am glad that AAT has now accepted to introduce a computerised accounting unit under the new standards.

    It makes a lot of sense that the future students have knowledge to operate the computerised accounting package if they are to work with computers in the industry etc. The old unit of "working with the computers" was out dated.

    The introduction of the spreadsheet unit is an excellent way forward for AAT members. In today's market if an accountant does not know how to use basic spreadsheets, he/she is unemployable in my opinion. Maybe the markets will forgive some of them, as there are many managers who just shy away from computers, but in future anybody who does not know how to use the spreadsheets will be put on a shelf.
    stevef wrote: »
    .................I think I might start a campaign to remove all accounting packages from the AAT syllabus as they only act as a distraction to what accountancy students should be learning.

    It would be interesting to see the out come of this campaign. May be you could try and do a small survey on this forum and gadge the opinions of the MIPs here.
    stevef wrote: »
    .................I am proud to say I have never used Sage, we use Agresso, and while I do not know the mechanics behind agresso I do know financial accountancy...

    You are fortunate to be working where you are and don't have to use sage.

    Unfortunately, Sage is the industry standard package. I am not a fan of Sage but I can not ignore the reality and I have to learn sage if I am to continue in my profession.

    If an excellent job offer came your way but you had to use Sage, would you accept that offer?
  • coojee
    coojee Registered Posts: 794 Epic contributor 🐘
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    sdv wrote: »
    AAT has to accept the current practices adopted in the industry and change their courses accordingly. AAT has to move with the times other wise the qualification will become a dodo.

    The problem with this is that we get qualified accountants who don't understand the entries that the computer system is making so can't tell whether what they've done is correct, don't know how to correct things when they've gone wrong and, as we see here from the OP, can't deal with a straightforward incomplete record job. Now there may not be many true plastic bag accounts anymore but there will still be some and all good accountants should know how to deal with it. What worries me is that this is the MIP forum, if people don't know how to deal with a job such as this should they really be practising as accountants/book keepers?
  • Jan
    Jan Registered Posts: 654 Epic contributor 🐘
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    What an interesting twist this thread has taken.
    I think you will find that Londina isn't an MIP, presume she posted on here to get the best advice. I don't think any of the forums are for the exclusive use of students/or members.
    She asked for advice, earlier in the day someone said she was panicing, she just needed pointing in the right direction. Hopefully now that she has got some help she is now busy sorting out what is obviously a messy set of books. No doubt the directors of the company will be complaining about the bill when they get it!
  • stevef
    stevef Registered Posts: 258 Dedicated contributor 🦉
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    Sorry did not realise this was the MIP forum, I just pick up recent posts from any forum.

    But is SAGE really the industry standard? Or are there lots of different packages out there but a lot of people use a version of SAGE.
  • truecockney
    truecockney Registered Posts: 94 Regular contributor ⭐
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    To stevef... Sage is one of the larger accounts packages (with many variations) and also has quite a large market share in comparison to it's rivals. Although, it is not the only package in each range (SME; LLP; Ltd Co; Large company; etc), it is deemed to be the "market leader" in Bookkeeping and Accounting software and something that other providers aim to match up to.

    Having a basic knowledge of it will always be beneficial when job hunting, although you could say the same with almost any package on the market (Access, QuickBooks and Sun for instance).
  • stevef
    stevef Registered Posts: 258 Dedicated contributor 🦉
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    Thanks truecockney, I understand that Sage is a market leader in its market, but I work in the public sector along with a more than significant number of other AAT students and members. In our world Sage barely gets a mention, one of the big players and fast growers is Agresso, there will be thousands of AAT students and members out there trying to use Agresso or another of the more powerful financial management packages, but the AAT syllabus does not include an Agresso module as far as I am aware.

    And I would not expect it to. All I am suggesting is, we need to take care thatwe do not train people just to drive a particular accounting package. As Technicians we should have a fundamental knowledge of the accounting behind those packages. It is when the package goes wrong or a scenario beyond the normal develops that the accounting package has no set routine for that you need a trained Accounting Technician.
  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    Monsoon wrote: »
    What is PLB? Proper Load of Bollards?! ;)
    The way I would tackle it is roughly to ignore their sales and expenses at first. Go from the bank, enter the bank into an accounting package or a spreadsheet to get a TB and then match their list of sales and expenses to that. Anything that is in their list of sales and expenses that waasn't from the bank had to come from somewhere else and you end up with a list of queries for the client, and take it from there...
    Jan wrote: »
    What an interesting twist this thread has taken.
    I think you will find that Londina isn't an MIP, presume she posted on here to get the best advice. I don't think any of the forums are for the exclusive use of students/or members.
    She asked for advice, earlier in the day someone said she was panicing, she just needed pointing in the right direction. Hopefully now that she has got some help she is now busy sorting out what is obviously a messy set of books. No doubt the directors of the company will be complaining about the bill when they get it!

    Many thanks Jan, you fully understood me. I'm not a MIP (yet), I'm an employee in a practice. I just needed some advice because I so used to SAGE and I have never had experience of dealing with "bag accounts" and work manually on Excel.
    You know what is like, it's like when you do revisions for exams, some people get used to the format of previous exams paper, then if the format suddenly change, they are lost! The knowledge is there somewhere in the brain, just need to apply it in different circumstances!

    I did what all of you suggested and especially Monsoon's advice, I totally ignored the client's data and I entered in Excel all the receipts and payments from the bank statement. Some I managed to match with what was provided, others not and I enquired them to the client, which he confirmed he forgot some amounts...My ETB now balance, hooray!!
    Shame they will not receive a huge bill, as they are paying a fixed rate charge (definately if it was my practice, I would charge extra for messy records)
  • JodieR
    JodieR Registered Posts: 1,002 Beyond epic contributor 🧙‍♂️
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    sdv wrote: »
    If an excellent job offer came your way but you had to use Sage, would you accept that offer?

    no.
  • Monsoon
    Monsoon Registered Posts: 4,071 Beyond epic contributor 🧙‍♂️
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    Londina wrote: »
    Many thanks Jan, you fully understood me. I'm not a MIP (yet), I'm an employee in a practice. I just needed some advice because I so used to SAGE and I have never had experience of dealing with "bag accounts" and work manually on Excel.
    You know what is like, it's like when you do revisions for exams, some people get used to the format of previous exams paper, then if the format suddenly change, they are lots! The knowledge is there somewhere in the brain, just need to apply it in different circumstances!

    I did what all of you suggested and specially Monsoon's advice, I totally ignored the client's data and I entered in Excel all the receipts and payments from the bank statement. Some I managed to match with what was provided, others not and I enquired them to the client, which he confirmed he forgot some amounts...My ETB now balance, hooray!!
    Shame they will not receive a huge bill, as they are paying a fixed rate charge (definately if it was my practice, I would charge extra for messy records)

    Glad you got it to work! I completely understand, you do know what you're doing but when you haven't done anything like it before, or for a long time, it's easy to 'forget' how to do it.

    Regarding charges - fixed rates should always be with a caveat - your fixed fee is based on the information you told us at the time of quoting. If the bookkeeping isn't up to the standard we agreed it would be, we reserve the right to charge accordingly.

    This works well for us - otherwise someone could go, yeah, all you need to do is the director's report, everything else is complete. Then you get to it and find the bank doesn't even reconcile and all the transactions in it are made up. I kid you not, this actually happened. "Oh, I just put in the transactions I thought should have happened." :lol: /facepalm.
  • Londina
    Londina Registered Posts: 814 Epic contributor 🐘
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    Even it has been a stress, I just glad I came across to this situation, I have learnt something new! There is always a first time for everything, not always somebody knows what to do straight away...
  • truecockney
    truecockney Registered Posts: 94 Regular contributor ⭐
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    I totally agree, stevef. You have to lay the foundations before building on top (a point this topic has raised) but also a small amount of knowledge in one package can help you see through the blurriness that newer packages have on a newcomers eyes.

    I never used Sage as part of the course when I qualified so have no knowledge of exactly how useful (or not) it is, although with the packages I have used (including manual adjustments from system malfunctions) the differences on face value are large but the principals are the same and you can view them from the principals as such.

    I'm please to see it all work out, Londina! Let's hope if something like this ever happens again it will be simplier when having a course of action to follow :)
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