Account question 2

[mrs_scottydog]

My first mindee used to pay in arrears (bad idea I know). Anyway the short story is that he left my setting suddenly with mum. Dad got in contact and said he would pay me what I'm owed. So invoiced Dad on 1st April for March and notice period. Normally my payment terms were 7-10 days after date on invoice. Dad was left in a terrible situation so as I was a friend before taking on their child I gave him some extra time to pay and he's paying it in installments.
Anyway my question is do I put all the payments into my accounts for the tax year 10/11 or because they're being paid to me this tax year do they go in my 11/12 accounts book. Hope that makes some sense. Thanks for you help. Hx

[tashaleee]

I always enter my payments on the date I receive them :thumbsup:

[Chatterbox Childcare]

If you are confident that you will get the money in 11/12 then you should put the credit into 10/11 and then a counter amount in 11/12 as a negative, so once he pays the amount becomes zero. If he doesn't pay then you have to enter the negative again as a bad debt.

Hope that makes sense :D

[auntym]

A lot of my parents sometimes pay late eg a week into the following month but they never let me down so I always enter it into accounts by month end. Just for ease. If they were to let me down it can always be amended but up to date never happened

[MrAnchovy]

In theory you should record the March element as income in 2010/11, and can basically choose which year the notice pay goes in but nobody is going to shoot you for putting it all in 2011/12.

Debbie if you enter it as a negative in April then you can't enter it as a negative again if it is not received. You are confusing the two different ways of dealing with debtors:

Enter it as income in 2010/11. Don't enter anything in 2011/12 unless you never receive it, in which case enter it as an expense in 2011/12. This is the right way and has the advantage that you get the 10% wear and tear allowance on the amount even if it is never paid.
Enter it as income in 2010/11. Enter it as negative income in April 2011/12; when you receive it, enter it as income again which will balance out the negative. If you don't receive it, don't do anything. This is not technically correct and loses the 10% wear and tear on a bad debt, but may be easier to understand and you don't have the danger of forgetting to enter the bad debt expense if you never get paid.

[mrs_scottydog]

Thanks everyone. I'm hoping to have the money I'm owed in not too long so when I get it will put it in my 10/11 tax year. 1 week of the notice pay should technically be entered into 11/12 I think as the notice went to 14th April but it would be easier to put it all in the same year. MrAnchovy - I'm so pleased that no one will shoot me if I put it in the wrong year.