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Paying an invoice with services - accounting

Double entry for an invoice settled through provision of services not cash

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My client is a micro entity whose main business is provision of services.

A supplier provided a good with a value of 150. The good was consumable, not inventory or a fixed asset.

Instead of cash payment, they asked for settlement with a free service worth 120.

If I make the following double entries: Dr Expenses 150, Cr Revenue 120 how should I account for the remaining 30?




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28th Nov 2018 21:55

How would you account for the entries if the supplier had paid cash for the service and your client had paid cash for the goods?

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to Tim Vane
29th Nov 2018 19:53

If you did what you suggested, you'd end up £30 overdrawn, but in reality you aren't.

Paul's answer below is correct.

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29th Nov 2018 09:11

Assuming that both supplier and client accept the deal is complete and no further amounts are due then either the supplier has given a £30 discount or your client has earned a premium of £30 (or I suppose a bit of both). I assume there is no VAT in question.

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