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I have a query on how a specific system deals with Disbursement entries. Below is the explanation:
E.g. Conveyacing matter for Mr. Smith: MAT1050; Disbursements: Land Registry £ 6.00 (VAT Exempt); Local Search Fee £ 120.00 (VAT Incl). Supplier (Creditor): Land Registry and UK Searches
Fee earner captures both disbursements, the entries are as follows:
Credit “Land Registry” with £ 6.00; Debit “Disbursement Expense” nominal account with £ 6.00; add a ‘pending disbursement entry to MAT1050 which does not affect any balances;
Credit “UK Searches” with £ 120.00; Debit “Disbursement Expense” nominal account with £ 100.00 and the VAT Input nominal account with £ 20.00 ; add a ‘pending disbursement entry to MAT1050 which does not affect any balances;
Billing the disbursements
Debit MAT1050 Office Account balance with £ 126.00, Credit “Disbursement Income” account with £ 106.00 and the VAT Output account with £ 20.00; remove disbursements from ‘pending’ status.
Paying the creditor
Debit “Land Registry” with £ 6.00; Credit “Bank” account with £ 6.00;
Debit “UK Searches” with £ 120.00; Credit “Bank” account with £ 120.00.
If possible, could you confirm that this is the correct way of recording disbursements according to Generally Accepted Accounting Practice and the SRA rules?
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