how to handle paid in advance to a supplier

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Nagendran (development) 03 December 2009

hai friends,

i need to know how to handle the paid in advance to a supplier in accounts.

an example journal entry for paid in advance to a supplier

Ansari (ca final) 03 December 2009

At the time of advance payment

Loans/Advances A/c Dr.

To, Bank/cash A/c

At the time of Purchases

Purchases A/c Dr.

To, Suppliers A/c

At the time of payment

Supplier A/c Dr.

To, Loans/Advances A/c

To, Bank/cash A/c

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Loans/advances a/c shall b shown under Assets side of Balance Sheet.

However, u can also Dr. Suppliers A/c at the time of advance payment.

Nagendran (development) 03 December 2009

thanks for your reply friend...

i had one doubt...

actually suppliers will comes under the account head of "sundry creditor"

how can v write the journal as loans/advances

Ansari (ca final) 03 December 2009

Dr. the suppliers a/c at the time of advance payment

u can also open a new a/c as Suppliers (Advances) A/c.

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Pranjal (Article) 04 December 2009

u may Debit suppliers a/c and credit bank or cash a/c with this effect supplier has debit balance and when purchase made than debit purchase a/c and credit supplier a/c. for ex. adv. paid 50000 to supplier. entry is

supplier A/c Dr. 50000

To Bank A/c 50000

purchase made for Rs 60000 than entry is

Purchase A/c Dr. 60000

To Supplier A/c 50000

To Bank / Cash 10000

in last the effect will be same.

Sachin Kumar (Account Executive) 23 April 2014

Advance paid to suppilier for printing & stationery Rs 1000 and remaining 15000 paid by cheque to supplier

please confirm the entry

Tanvi (Student) 17 April 2015

At the time of making advacnce :-

Advance a/c Dr. 1000

To Cash A/c 1000

Suppliers A/c Dr. 1000

To Advacnces A/c 1000

At the time of making Purchase :-

Purchase A/c Dr. 16000

To Supplier A/c 16000

At the time of making payment :-

Supplier A/c Dr. 15000

To Bank A/c 15000

chandra sekar (Manager-Accounts) 06 January 2016

when yu are paying advance agst purchases, don`t use A/C head " Loans and Advances", which belongs to group , Current Assets. YU can debit the supplier itself and adjust, when final payment made.