Accounting systems are classified as either ”cash” (meaning income and expenses are classified as received/paid on the date shown on the bank statement) or ”accrual” (meaning income and expenses are classed as received/paid on the date due).
Most SMSFs use accrual-based accounting systems, but often a dividend or distribution assessed as payable for the current financial year is not actually received until after June 30. Trustees may receive a number of dividend and distribution payments in early July that should be counted in the income for the year ended June 30.
There are two steps to posting these receipts. Firstly, they are posted as Receivables (or Payables, if expenses). The applicable date is the due date. The amount is debited to Accounts Receivable.
Note that the first step MUST be performed manually. You cannot complete this step by allocation from Data Feeds.
To complete this step:
- From the Income Tab, choose to Add New Income.
- Select the Account (Fund or Member) and choose the Asset
- In the Add to Account field, choose the appropriate RECEIVABLE account (1-1060 for Dividends; 1-1061 for Distributions; 1-1075 for Interest)
- Enter the Amount and the Date on which the amount was payable (This date will usually show on a payment advice.)
- Click SAVE INCOME.
Next, the actual receipt is posted to the Receivables account as a credit. The applicable date is the date actually received. The amount will show as a Debit to the bank account on the date received. This step can be completed manually from the Income Tab or by Data Feed allocation.
By Data Feed Allocation:
- Locate the receipt
- In the Allocations list, select RECEIPT FROM DEBTOR under INCOME
- Mclowd displays the EXPENSE screen, prepopulated.
- Check that the data is correct and click ADD EXPENSE
Currently, Mclowd does not enable correct allocation of received income (this is on the list of issues for remedy), and therefore a journal entry is required to transfer receipt from Accounts Receivable to Dividends, Distributions or Income receivable so that it cancels out the balance in that account.
To complete the journal entry, select JOURNAL ENTRIES from the SETTINGS MENU and click ADD NEW JOURNAL ENTRY. The date of the Journal Entry is the date the payment was received.
- You will need to DEBIT 1-1050 Accounts Receivable.
- The CREDIT will be to 1-1060 Dividends Receivable; 1-1061 Distributions Receivable; or 1-1075 Interest receivable (depending on the type of income and the account to which you allocated it in the step above.
If you are using a version of Mclowd that does not include the DATA FEED feature, you can complete this process manually in a single step that allocates the Received Income via a Journal Entry.
In this case, your Journal Entry would still CREDIT 1-1060 Dividends Receivable; 1-1061 Distributions Receivable; or 1-1075 Interest receivable (depending on the type of income and the account to which you allocated it in Step 1.
The DEBIT would be to the Bank account to which the amount was deposited.
NOTE: Bank Data Feeds automates data entry and reduces the potential for errors. This feature is part of the PREMIUM Version of Mclowd.
For information on upgrading and details of the various additional features in the Pro and Premium Versions: