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Hi Terry
With the reimbursed fuel, you could set up an additional sales code called 'Reimbursed Fuel' so that it shows on the P&L clearly and separately from the normal sales income. As this cost is also going to be in the expense section of the P&L, it will cancel itself out on the bottom line.
Another way some people do it is, even though it's income - direct it to the same expense code as the fuel expense, hence again, cancelling itself out.
With regards to when your client had 2 vehicles - if the petrol vehicle was not for business use, it would be quite feasible that the diesel one was 100% business use, however, the only way to proportion this is by asking your client 'does he use it for any non-business use'. If his answer is yes, then HE also needs to assess how much of that use is non-business in order to give you a percentage, it's not down to you to apportion it with any kind of formula.
This would be the same when he was using just the one vehicle for both business and non-business use, but as you've mentioned, he's told you that this was a 75/25 split - that sounds reasonable.
Assuming all the fuel receipts and expenses are still being put through the business 100%, the way to deal with this would be to work out, during the dual use period of time, what 25% of the total costs are, and journal this from the vehicle expense category to either drawings (if sole trader/partnership) or directors loan (if Ltd) I would probably do this on the last day of each month, or it can be done at the end of the financial year - I wouldn't do it for each and every receipt as you go along as this could be very time consuming and unnecessary.
I hope this helps.
Carol
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