In a normal situation when a debtor makes a payment you would perform a Cash Receipt entry for that debtor in the same month. In other situations you can be left with Debtor Payments that have not been seen before performing End of Month procedure. A likely cause would be Direct Deposits that show up on your bank statement after you have performed End of Month procedure for that month.
An example would Debtor ABC Enterprises make a $100.00 payment by Direct Deposit on the 30th of September. The payment is processed and is listed on the bank statement dated the 30th of September but does not appear until after it has been checked on the 2nd of October. . In a real life situation , the Debtor Month End has been performed on the 30th of September leaving you with a payment of $100 that has not been processed.
When you are faced with this situation, you can compensate for the closure of the month by performing separate Receipt entries and making use of a “Holding Account” . A “Holding Account” refers to a general ledger account that is used in the process of receipting the Debtor Payment for the previous month when in the current month.
In this example the debtor’s month has been rolled. The Month has been rolled from September to October.
Once you have configured and selected an appropriate General Ledger account to use, cash receipt entries can be performed. This is broken into two separate entries, the first entry affects the bank and the second affects Debtor/Financial side.
- 1st Entry
- Use the last calendar date for the month of September and enter the debtor and full amount on the top line
- On the second line, send the amount to the general ledger account
- 2nd Entry
- Use a October date and a type of ‘Adjustment’, the first line should be entered as 0.00.
- On the lower first line, apply the amount to the debtors account as a positive
- On the lower second line, apply the amount as a negative value to the general ledger account.
After you have accepted the batch , the following is performed
- Amount of $100.00 is receipted and dated the 30th of September and will effect the cashbook for September, enabling the September Bank rec to be completed.
- The $100.00 is credited to the general ledger holding account in September.
- Amount of $0.00 is receipted and dated the 1st of October and will not effect the cashbook for October
- Receipt is processed against the Debtor ABC Enterprises for the amount of $100.00 in the Month of October
- $100.00 is cleared from the general ledger holding account in October.