MoneyWorks accounting system has a receive deposit for order feature built-in the orders systems (on both Sales Order and Purchase Order system); you have an option to process a receipt from the Sales Order system when a deposit has collected, or a payment transaction once a deposit has paid for the purchase order. Unlike the Purchase Order system, which allows generating a Prepayment Invoice, Sales Order only has processes for ‘Receive deposit for order’ and ‘Ship goods with invoice’. That is, MoneyWorks generates a receipt when you process ‘Receive deposit for order’ from a Sales Order, and a Sales Invoice recorded when ‘Ship goods with invoice’ has processed.
Therefore, you have to issue a Sales Invoice separately to the customer when demanding a deposit for the order, it debits the Accounts Receivable and crediting the Deposit Received from the Customer account (which is a current liability account). Then, do a receipt with overpayment method when payment received.
How does the overpayment method work?
Assuming you are required to issue a Sales Invoice to a GST registered customer to demand $10,000 deposit for a $30,000 worth of goods ordered.
Add a ‘Deposit received from the customer’ account, which is a current liability account type, to the account list. Then, create a deposit item if you are using product item in invoices. In the product window, link the ‘Deposit received from the customer’ account to the income field of the product to allow it to use in Sales Invoice transaction.
Step 1: Sales Invoice
Record a sales invoice for the deposit of $10,000 (use the deposit item which you have created or use the ‘Deposit received from the customer account if you are not using the product feature in MoneyWorks). The invoice debits the accounts receivable 10,7000, credit deposit received from the customer 10,000 and credit 700 to the GST received (output) account.
Step 2: Receipt
Do not apply the deposit collected to any Sales Invoice when recording the Receipt, leave the receipt as an overpayment so to keep it in the ageing report.
Although no invoices have offset, the receipt still debits the Bank 10,700 and credits the accounts receivable 10,7000.
The Statement of Account shows both the Sales Invoice and Receipt from the customer with a statement balance zero.
Besides, the invoice and receipt, the overpayment, shown in the ageing report.
Step 3: Sales Invoice
The deposit amount which you have invoiced earlier has to deduct from the final invoice (can be after the last detail item). The invoice debit 10,000 to the deposit received from the customer account, debit accounts receivable 21,400, credit Sales 30,000 and credit GST received (output) 1,400.
Step 4: Receipt (contra)
The accounting system will prompt to apply the ‘surplus’ when an overpayment is detected. Click ‘Use Previous Surplus’ button when prompted and enter the amount applied to the invoice in the following window.
Step 5: Receipt
After the surplus applied to the invoice, MoneyWorks will bring you back to the Receipt which you intended to record. Then, enter 21,400 in the amount received, assuming the customer has settled the outstanding in full, and offset it against the invoices listed.
The statement of account shows all the invoices and receipt.
Deposit received from the customer
Credit Invoice (Step 1): 10,000
Debit Invoice (Step 3): 10,000
Debit Invoice (Step 1): 10,700
Credit Receipt (Step 2): 10,700
Debit Invoice (Step 3): 21,400
Credit Receipt (Step 5) 21,400
GST Received (Output tax)
Credit Invoice (Step 1): 700
Credit Invoice (Step 3): 1,400
Debit Receipt (Step 2): 10,700
Debit Receipt (Step 5): 21,400
Credit Invoice (Step 3): 30,000
1. The steps used for the deposit paid to the supplier is similar to the deposit received from the customer, you use ‘deposit paid to the supplier’ account, which is a current assets account type, instead. The transactions type are Purchase Invoice and Payment instead of Sales Invoice and Receipt.
2. You may require to adjust the deposit received from the customer account if the transactions are in foreign currency. Assuming base currency is in Singapore dollars, the invoice (step 1) has recorded at 1SGD:0.73USD, it will credits deposit received from the customer account at SGD13,698.63. Let’s say the exchange rate used in the 2nd invoice (step 3) is 1SGD:0.72USD, it will debit the deposit received from the customer SGD13,888.88. There will be a difference of SGD190.25 which you are required to pass general journal to debit exchange loss of 190.25 and credit 190.25 from deposit received from the customer.
3. This method does not require to process a ‘Receive deposit for order’ from the Sales Order if you are using the Order system since a receipt (step 2) has already recorded into the MoneyWorks accounting system.