Advance adjustment

you have to passed these entries

(1)    Engineer A/c                   2000

                To Cash / Bank A/c                 2000

( At the time of payments to engineer)

(2)  Purchase A/c ( Dr)            2300

               To Engineer A/c                        2000

                To Cash/ Bank A/c                    300

( At the time of purchase date)

Dear Veeru,

Thank you for your valuable response,

i want to show this whole amount of 2300 Advance to engineer as Advance in his account. like this below entries. Before recording Entry for this 2300, if i pass another Entrt as shown in (2).

Please correct me if i am wrong.

1) Purchase A/c    2000

                Engineers A/C    2000      Cr

2)  Engineers A/c     300    ( As Advance to Engineer)

              Cash/ Bank A/c     300                      Cr

3)  Purchase A/c  300

            Engineers A/c     300   

Ur cash balance won't match if u show fake entry of advance of Rs. 300/-. So the entry suggested by Veeru Sagar is appropriate.

dear Zaif 

Cash never goes negative and as in ur excel sheet bcoz if u have not any cash in your cash book then how would you be able to expense that amount so that 1st you show the excess amount expensed by engineer received cash from engineer  as advanceand after that show the entry of purchase....in such case ur cash will not be nagative and as i have suggest u the entry above case you can pass ...............

Keep in ur mind, cash book will never goes to Cr balance

Further,

(i) For Advance

Engineer Dr 2000

Cash/Bank Cr 2000

(ii) For Purchase

Expense/Purchase Dr 2300

Engineer Cr 2300

(iii) For Settlement

Engineer Dr 300

Cash/Bank Cr 300