Contra Entry - Accounts Package

[user name]

Not sure if this is right place to post this or not

Question aimed at accountants or bookkeepers

I am using big red books. I have a case where a customer of the business made a payment to a supplier of the business (rather than paying it directly to the business). I guess you could call it a contra entry.

What are the correct postings for this. If i do a journal entry it wont let me post directly to a debtors control or creditors control account. It wont let me post to cash control account either.

Thanks

 

[Padraigb]

I'd treat it as two transactions:
1. A cash receipt from the debtor;
2. A cash payment of the same amount on the same date to the creditor.

 

[user name]

Thank P.

 

[Woodie]

I'm not so sure, probably it is a cash transaction if I read that there is something outstanding on your books. But I could also read that the relationship was your client to your supplier.

I have a case where a customer of the business made a payment to a supplier of the business (rather than paying it directly to the business). I guess you could call it a contra entry.

If you had an outstanding invoice to client and payment to supplier and they resolved then credits to and from both would be more appropriate. In the alternative reading where it is simply a payment of convenience client to your suppplier, it is simply a business arrangement which you have facilitated and actually would have nothing to do with your books.

 

[Paddy199]

Set up a bank account named contra bank account. Put in a cash receipt and cash payment with the same date and ref to each.