I have been sent a Trial Balance by the accountant of my client. My client has 3 shops that he runs in a partnership with his wife.

The TB has separate figures for P&L balances for each branch, but they have done a combined Blanace Sheet for the 3 branches and so the totals are not separated.

My client wants each branch set up individually so he can see at a glance how each shop is doing, but how can I enter opening balances for each shop when there is only one combined balance sheet totals?

Any suggestions?

Hi Annette,

Let's take a simple example: Say the balance sheet looked like this:

Cheque Account: £200
Owner's Capital: £50
Current Earnings: £150

And the P&L for each shop was as follows:

Shop 1: Sales Income £120, Cost of Goods Sold £70
Shop 2: Sales Income £100, Cost of Goods Sold £30
Shop 3: Sales Income £50, Cost of Goods Sold £20

(Note that the total profit for all shops matches the Current Earnings figure).

You would record this in Solar Accounts by going to the Accounts list and setting the opening balance for the Cheque Account to £200 and the Owners Capital to £50. Then create a General Transaction and tick the 'Multiple Accounts' checkbox, and in the From Account table enter Sales Income for £150, and in the To Account table enter Cost of Goods Sold for £70 and Balancing Account for £50. Click the Options button in the bottom-left corner of the General Transaction window and select 'Associate with Job or Department' then create a department called 'Shop 1'. Create two more General Transactions in the same way for Shop 2 and Shop 3.

In future you should allocate all income and expense transactions to one of the three 'departments' you have set up. You can then see how each shop is doing by viewing the 'Profit and Loss - By Job or Dept.' report.

Regards,

Whoops just noticed an error in my figures for the General Transaction - sorry! In the To Account table the Balancing Account should be £80 (not £50) so the transaction is balanced.

Cheers,

Thanks but the client wants the 3 shops splitting as one is VAT registered.

Can I use branches/departments if one is not VAT registered?

One shop is VAT registred and the other 2 are not. Would I enter transactions for the 2 not VAT registered as out of scope for VAT?

Hi Annette,

Yes that is a good approach. For the shop that is VAT registered you cannot use General Transactions because these are treated by Solar Accounts as 'Out of Scope'. Instead, create Money Received and Money Paid Out transactions with an appropriate VAT rate.

Regards

Thanks Mark, sorry to be a pain, just a quick question on the TB again.

My clients y/e is 5/4/11 and the TB is dated as 5/4/11. What financial year should I be in in Solar accounts to add these figures, year starting 6/4/10 or 6/4/11? And then do I just go and start a new financial year to transfer the profit figure to "retained earnings"?

Also if there are creditors, should I enter the relevant invoices into solar accounts?

Hi Annette,

Sorry I thought you were starting to use Solar Accounts part way thorough the financial year. Since you are starting to use Solar Accounts from the start of your financial year you should transfer the profit to the Retained Earnings account and leave your income and expense balances at zero. So in summary here's what you do:

1. Create a new Solar Accounts data file with the financial year start date of 6/4/11

2. Enter any sales invoices and purchase invoices which were outstanding at 6/4/11. These invoices should be dated in the previous financial year and should be allocated to the 'Retained Earnings' account

3. Create a balance sheet report dated at the end of your previous financial year, then set the opening balances in Solar Accounts to match these balance sheet figures.

Regards,

Hi Mark:-

Is there any way way of doing what you suggested earlier ie general transaction fr p&l figures and put the outstanding invoices to balancing account?

This would enable me to compare last years figures agains the new years figures?

Hi Charlie,

Yes, instead of starting your financial year on 6/4/11, start it on 6/4/10. Then enter income/expense transactions in that year, then start a new financial year. Then continue with steps 2 and 3.

Regards,