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Advance paid- entry

malarvannan (accounts executive) (133 Points)

07 July 2011

Dear friends

Our company is a trading co., we give advance payment to the suppliers for the purchase of material

ex:- abc ltd- supplier

Order value : 10000

Advance payment: 30% on order value i.e.3000/-

How to made entry for advance payment given.

As per my knowledge- i create new ledger- advance abc ltd., under current assets.Once we recd material

agst material we will adjust the payment. is it right?

Pls clarify...its urgent

Regards

malarvannan.d

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4 Replies

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 07 July 2011

abcltd, ac -- - - - - - - - -dr. 3000

to cash/ bank

(being sdvance paid)

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 07 July 2011

no need to create new ledger you can made payments in the abc ltd. ac. , as it is the account of creditor

1 Like

Deepak Gupta (CA Student) (15922 Points)
Replied 07 July 2011

Originally posted by : malarvannan
	Dear friends Our company is a trading co., we give advance payment to the suppliers for the purchase of material ex:- abc ltd- supplier Order value : 10000 Advance payment: 30% on order value i.e.3000/- How to made entry for advance payment given. As per my knowledge- i create new ledger- advance abc ltd., under current assets.Once we recd material agst material we will adjust the payment. is it right? Pls clarify...its urgent Regards malarvannan.d

No need to create a separate advance payment ledger. Pass the following entry

1) For advance payment

Supplier A/c………..Dr

To Bank A/c

(Note for accounting in tally: Activate maintain bill by bill detail and select Advance under method of adjustment/Type of Reference)
.
2) For purchase of material

Purchase A/c……….Dr

To Supplier A/c

(Select Against Reference for method of adjustment/Type of Reference and select the advance payment voucher made earlier. Supplier account will automatically be adjusted and will show outstanding payable for the balance amount)