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Reimbursing employee for materials bought for a project

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Contributing Cover User Felisse
7 Posts
Contributing Cover User
Australia
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Reimbursing employee for materials bought for a project

Hi,

 

I currently work at a building construction company focusing on modular projects. We purchased a lot of materials and hire contractors to do work for us. Also, sometimes, our GM buys the materials needed for the project so he pays for it first then keeps the receipts for reimbursement. How am I supposed to account for these costs? The previous bookkeeper did a cash disbursement of:

Dr 5xxx Raw Materials (Cost of sales)

Cr 1xxx Bank account

 

Is that everything i need to do? 

 

 

4 REPLIES
Ultimate Partner ronatbas
3,325 Posts
Ultimate Partner
Australia

Re: Reimbursing employee for materials bought for a project

@Felisse

 

The previous bookkeeper did a cash disbursement of:

Dr 5xxx Raw Materials (Cost of sales)

Cr 1xxx Bank account

Unless there was another transaction that was

Dr Bank 

Cr GM 

and that this actually happened how did the bank ever get reconciled, or are they hanging on the bank rec? It may be that there was an entry at month end that was move these to a Directors Current/Loan Account.

The more conventional way of doing this is to pay from the Directors Account and then periodically reimburse the director from the bankwith a Spend money transaction.

 

Ron B
BAS Group
03 95588477

info@basgroup.com.au
Making MYOB work for you
Contributing Cover User Felisse
7 Posts
Contributing Cover User
Australia

Re: Reimbursing employee for materials bought for a project

Thanks for replying to my query, Ron.

 

Unfortunately, I didn't see an entry like that at the end of the month. Also, they havent reconciled the bank accounts for a few months now. May I ask why the transaction of: Dr Bank Cr GM is needed? I am still relatively new to MYOB and is a bit confused.

 

So is it better to have spend the money transactions like:

Dr 5xxx Raw Materials (Cost of Sales)

Cr 2xxx Directors Account 

 

Dr 2xxx Directors Account

Cr 1xxx Bank

 

Or maybe I can do it under the Purchases register as:

Enter Purchases under GM's supplier card 

Dr 5xxx Raw Materials

Cr 2xxx Trade Creditors

 

Then Pay Bills

Dr 2xxx Trade Creditors

Cr 1xxx Bank a/c

Would this work or not really?

Ultimate Partner ronatbas
3,325 Posts
Ultimate Partner
Australia
Accepted Solution Solved Solution

Re: Reimbursing employee for materials bought for a project

@Felisse

 

Sounds like you are going to have your time cut out, a new job and having to get the bank up to date before end of year.

It may have been that the previous bookkeeper was right - that the cash flowed from bank to GM but, in the absence of rec report, you need to confirm this from the bank statement. This not  a very tidy way of doing it, unless the GM has a debit card that is linked to the bank.

The normal situation is 'follow the money'. GM pays using personal funds so he should have an account called GM Loan Account (set up as a #2-xxxx, credit card type). Money can then flow out of and into that account. When he uses personal funds to purchase goods it is Spend Money from that Account to COGS. When the bank repays him it is Spend Money from Bank to his account, actual money goes to his bank.

 

Your note implies that you are using journals. MYOB is not really set up for journals. the accounting is no different but Spend Money, Pay Bills are so much more convenient. I also see that you are proposing a direct entry into the Trade Creditors account. This is a real no no. There are four control accounts which should not have direct entry - the Trade Debtors/Creditors and the two GST accounts. I also would not be Setting up a bill over the GM's name as an audit would be questioning the veracity of such a bill.

 

You may like to spend a bit of time chasing out an excellent book 'MYOB for Dummies' by Veechi Curtis, a MYOB Certified Consultant and trainer. It is one that we hand to our trainees as it explains the normal processes of MYOB very well.

 

 

Ron B
BAS Group
03 95588477

info@basgroup.com.au
Making MYOB work for you
Contributing Cover User Felisse
7 Posts
Contributing Cover User
Australia

Re: Reimbursing employee for materials bought for a project

It does sound like I'll be catching up on a lot of reconcs. I have an idea on what I can do now. Thank you so much for your help! I appreciate it

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