All Respected Members,
Please educate me that how can we record an advance receipt invoice with charging sales tax in accounts ?
For Example:
We have to raise an advance receipt invoice of RS. 100, 000 at rate of 10% sales tax to our clint; how we will record it in accounts.
Further, please also educate that when advance payment against this invoice will receive; how we will record it in accounts too ?
It is requested to please share journal entries of both cases.
I would like to thank in advance to them who will response regarding this query
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AA-30 (Relaunch)- How to Record Advance Receipt Invoice in Accounts
Replies (6)
Quick Summary
On raising advance receipt
Debit: Accounts Receivable - Client's Name Rs. 100,000
Credit: Sales Revenue Rs. 90,000 (Rs. 100,000 - Rs. 10000 sales tax)
Credit: Sales Tax Payable Rs. 10000
on receipt of payment
Debit: Cash/Bank Account Rs. 100,000 Credit: Accounts Receivable - Client's Name Rs. 100,000
Debit: Accounts Receivable - Client's Name Rs. 100,000
Credit: Sales Revenue Rs. 90,000 (Rs. 100,000 - Rs. 10000 sales tax)
Credit: Sales Tax Payable Rs. 10000
on receipt of payment
Debit: Cash/Bank Account Rs. 100,000 Credit: Accounts Receivable - Client's Name Rs. 100,000
Dear Nikita Ma'am,
Thanks for reply.
Please let me know; as you mentioned above, why should we record advance receipt invoice as sale revenue ? whereas advance is a libilty which is payable on us to clint.
when we deliver the services, at that time this advance amount adjust in sale and it's ledger will be nil.
Please clarify as I don't understand the logic.
Thanks for reply.
Please let me know; as you mentioned above, why should we record advance receipt invoice as sale revenue ? whereas advance is a libilty which is payable on us to clint.
when we deliver the services, at that time this advance amount adjust in sale and it's ledger will be nil.
Please clarify as I don't understand the logic.
Debit bank/cash
credit Advance against goods
later on
debit: advance against goods / services
credit: Revenue
sorry sir it was mistake. actually I thought time of raising invoice and time of receiving payment is different.
credit Advance against goods
later on
debit: advance against goods / services
credit: Revenue
sorry sir it was mistake. actually I thought time of raising invoice and time of receiving payment is different.
Dear Nikita Ma'am,
Thanks for your answer and no need to say sorry you thought was correct my query was same.
Let me repeat my query,
For example;
my customer asked me raise an invoice to claim advance fee. we generated an invoice on 1-8-2023 of Rs . 100, 000 at the rate of 10% ST but client released advance payment on 4-8-2023.
in this situation, what would be journal entry when we issued advance fee invoice (on 13
1-8-23) and when we will receive advance payment from clinet (on 4-8-23) ?
Thanks for your answer and no need to say sorry you thought was correct my query was same.
Let me repeat my query,
For example;
my customer asked me raise an invoice to claim advance fee. we generated an invoice on 1-8-2023 of Rs . 100, 000 at the rate of 10% ST but client released advance payment on 4-8-2023.
in this situation, what would be journal entry when we issued advance fee invoice (on 13
1-8-23) and when we will receive advance payment from clinet (on 4-8-23) ?
Debit: Accounts Receivable - Client Name (100,000), Credit: Advance Fee Income (90,000) Credit: Service Tax Payable (10000)
When you receive the advance payment from the client on 4-8-2023:
Debit: Bank Account (100,000), Credit: Accounts Receivable - Client Name (100,000)
&
Debit: Advance fee income 90000 Credit: Revenue from customers 90000
&
Debit: Service tax payable 10000 credit: Bank Or cash 10000
Sir According to me this will be the entry
Dear Nikita Agerwal,
Thanks a lot to detailed reply.
Your 1st entry for recording advance fee invoice seems perfect.
As far as receiving advance payment entry is concerned, it should be a combine entry to reflect or give proper information.
It is requested to you if possible, please ask about it from your colleges or friends those in your circle and have vast information of accounting and share with us.
Anyhow, thanks a lot to spend your precious time to reply my qurey.
Thanks a lot to detailed reply.
Your 1st entry for recording advance fee invoice seems perfect.
As far as receiving advance payment entry is concerned, it should be a combine entry to reflect or give proper information.
It is requested to you if possible, please ask about it from your colleges or friends those in your circle and have vast information of accounting and share with us.
Anyhow, thanks a lot to spend your precious time to reply my qurey.
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