Good Day to you,
*l've actually posted the same question yesterday and gotten some replies on the post but the system seems to have block my post somehow and i have to re-register with a new account, if you find my post familiar and has advise me earlier on, i will be thankful if you can advise on my query further. " )
Here's the story,
In 2013
Was told that deposit is also considered as deferred income which will affect the net profit and so i made the following entry:
Dr Bank USD1,000
Cr Advance Rec'd USD1,000
In 2014
Sales invoice for the deposit is created to the customer in 2013 and payment is only receive (in a different currency) in 2014, i've made the following:
Dr Advance Rec'd S$750
Cr Sales (SGD) S$750
I only got to realise that i shouldn't have made the above entry as my bank account in the system does not show the receiving amount.
The bank account in my system does not tally with my bank statement either. I hope someone will be able to advise me further.
Thank you in advance!
Replies (7)
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As I said yesterday, you will need to decide whether the sum in question is a deposit, which is one thing, or income received in advance of the period it relates to, which is another thing.
It can't be both at the same time.
Which is it?
So best if you don't call it a deposit, as that will cause confusion.
So what it the starting point before you make the entries to recognise the fact that income received in one period relates to the next period. Has the customer paid the money and it's in the bank? if so where has the receipt been credited to?
Total receipts?
Are you saying that you have actually received $1750 in total and that the sale is now complete?
If so, your entry is likely to be
Dr Bank 750
Dr Advance 250
Cr Sales 1000
This isn't difficult. Once
This isn't difficult. Once you have raised an invoice the payment of it etc. will take care of itself.
What you need to look at is the credit entry you made to sales when the invoice was raised. If that includes income that you want to be shown in next year's P&L, and not this year's, take the income you want to defer out of sales and put it in deferred income. Then prepare your accounts, including deferred income in creditors. Then in the next year reverse the entry.