Purpose

This article provides worked examples of how to enter common Balance Sheet projections in Magnifi, including asset purchases, loan repayments, income tax, dividends, drawings, ATO arrangements, and receivable/payable adjustments.

When to Use

Refer to this guide when you want to:

• Enter Balance Sheet projections for typical business transactions.

• Understand how Magnifi automatically balances entries between accounts.

How To

Purchase an Asset via Finance

1. Add a projection under the asset account (e.g., Motor Vehicles).

   • Description: Manager Vehicle

   • Other side of entry: Hire Purchase Liability

2. A new row appears under Motor Vehicles for “Manager Vehicle.”

3. The offset automatically appears under Hire Purchase Liability.

4. If the asset account is GST-flagged, Magnifi also creates GST entries, increasing the liability and offsetting against the GST account.

Enter Loan Repayments

1. Add a projection under the liability account (e.g., Hire Purchase Liability).

   • Description: Loan Repayments – Manager Vehicle

   • Other side of entry: Trading Account (cash)

   • Cashflow classification: Operating

2. The repayment line appears under Hire Purchase Liability.

3. The offset appears as a read-only entry against the Trading Account.

Recognise Income Tax Expense

Option 1 – Show in Profit and Loss

1. Add an account under the Profit and Loss tab (e.g., Income Tax Expense) linked to Income Tax Payable.

2. Link this P&L account to the category Income Tax under Chart of Accounts.

3. Enter projections against Income Tax Expense in P&L.

4. Magnifi posts the offset to Income Tax Payable in the Balance Sheet.

Option 2 – Enter directly in Balance Sheet

1. Add a projection under Income Tax Payable.

   • Description: Income Tax Expense

   • Other side of entry: Retained Earnings

2. Magnifi increases Income Tax Payable and decreases Retained Earnings.

Recognise Income Tax Payments

1. Add a projection under Income Tax Payable.

   • Description: Income Tax Payment – Q1

   • Other side of entry: Trading Account (cash)

   • Cashflow classification: Income Tax

2. The payment reduces Income Tax Payable and the offset shows in the Trading Account.

Recognise Dividends

Option 1 – Show as Profit and Loss expense

1. Add a P&L account called Dividends, linked to Dividend Payable.

2. Enter projections in the P&L. It will appear after Net Profit as a Dividend expense.

3. The offset appears under Dividend Payable in the Balance Sheet, unless you choose to recognise the payment immediately by linking it to the Trading Account.

Option 2 – Enter directly in Balance Sheet

1. Add a projection under Dividend Payable.

   • Description: Dividend Expense

   • Other side of entry: Retained Earnings

2. Magnifi increases Dividend Payable and reduces Retained Earnings.

Option 3 – Recognise only the payment

1. Add a projection under Retained Earnings.

   • Description: Dividend Payment

   • Other side of entry: Cash account

   • Cashflow classification: Dividend

Recognise Drawings

1. Add a projection under Loans – Directors.

   • Description: Director Drawings

   • Other side of entry: Trading Account (cash)

   • Cashflow classification: Non-Operating

2. The drawing increases Loans – Directors and reduces cash.

Recognise an ATO Payment Arrangement

1. Add a projection under ATO Outstanding Debt (or GST if no separate account exists).

   • Description: ATO Arrangement

   • Other side of entry: Trading Account (cash)

   • Cashflow classification: Non-Operating

2. The arrangement reduces ATO Outstanding Debt with an offset against cash.

Adjust Timing for Receivables or Payables

1. Add a projection under the receivable or payable account (e.g., Trade Debtors).

   • Description: Receivables Adjustment

   • Other side of entry: Trading Account (cash)

2. Enter a positive projection to increase receivables (collections lower than expected).

3. Enter a negative projection in the following month to reduce receivables (collections higher in the next period).