Advance payment

This query is : Resolved

ramendra singh rana (Querist)
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03 October 2011 i am an accountant in a consultancy company
and we receive some advance amount and full amount after the placement of candidate but if the candidate is not placed we have to return the 75% of the amount.
what should be the accounting entry of the whole process.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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03 October 2011 Bank A/c Dr. 20,000
To XYZ Ltd. (Advances) 20,000
(Being advance received)

Bank A/c Dr. 80,000
XYZ Ltd. 20,000
To Consultancy Fees 1,00,000
(Being balance amount received)

Consultancy Fees A/c Dr. 75,000
To Bank A/c 75,000

ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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03 October 2011 Bank A/c Dr. 20,000
To XYZ Ltd. (Advances) 20,000
(Being advance received)

XYZ Ltd. 15,000 (75% of 20,000 refund)
To Consultancy Fees A/c Dr. 5,000
To Bank A/c 15,000

ACMA Obulirajan R

ACMA Obulirajan R (Expert)
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03 October 2011 Even you can split the entry like this:-

Bank A/c Dr. 20,000
To XYZ Ltd. (Advances) 20,000
(Being advance received)

XYZ Ltd. 15,000 (75% of 20,000 refund)
To Bank A/c 15,000
(Being the advance refunded)

XYZ Ltd. 5,000
To Consultancy Fees A/c Dr. 5,000
(Being fee received for consultancy)