Client paid a £3k deposit for a VAN in June 2013. Year end was 30th June.
Van not due to arrive until September.
Double entry would be Cr Bank £3k, Dr ???? - potentially a debtor balance on BS?
Sorry, probably totally simple answer but I can't for the life of me decide where to put it...
Replies (4)
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Prepay
Yes prepayments would be my choice as well although doesn't matter that much as both debtors and prepayments go on the same side of the balance sheet :-)
Deposit
I am with Peter - give it its own line, Deposits, under Debtors due within 1 year.
The generic description is "Prepayments & Accrued Income" which to me implies that just as the other half of accrued income would appear in the P&L as Sales, the other half of Prepayments should be an expense in the P&L. The deposit on a van will be a debit to Fixed Assets in the Balance Sheet, so I would not describe it as a prepayment.
Whatever you do, don't capitalise the deposit as Fixed Assets and don't even consider depreciating it.