Forum Message

Part payment of a liability by a non related business

My client has a liability that totals £2,100. They are liable for 50% of this cost and pay £87.50 monthly. I only became aware that this was the case recently after already putting in the full cost in to their accounts for last year.

If I change the cost of the liability in last years accounts, I then have a liability account of -£1,050. Have recorded the payments for this year, so the liability account still shows £1,050. How can I clear this by showing that another business has paid this part of the liability?

The liability was for an advertising board that showed both businesses on it.


Posted by Craig Tibbs on Aug 7, 2013 5:38 PM BST

Hi Craig,

The liability account balance you record in Solar Accounts should only reflect the (half) amount that the business owes. Assuming that they only started making the £87.50 payments in the current financial year, set the opening liability balance to £1,050 and record the monthly payment to reduce the balance over the year.

Regards


Posted by Mark McLaren (Solar Accounts) on Aug 8, 2013 10:51 AM BST