Tag Archives: Deposit

Receive deposit for the order (overpayment method)

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.

Setting:
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.

deposit item

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.

Deposit for order invoice.png

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.

Overpayment

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.

Statement with overpayment

Besides, the invoice and receipt, the overpayment, shown in the ageing report.

Ageing with overpayment

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.

Sales Invoice

Ageing with final invoice.png

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.

Apply surplus to invoice

Allocate surplus

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.

Receive payment

The statement of account shows all the invoices and receipt.

Statement - final.png

 

Ledgers:

Deposit received from the customer

Credit Invoice (Step 1): 10,000

Debit Invoice (Step 3): 10,000

 

Accounts Receivable

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

 

Bank

Debit Receipt (Step 2): 10,700
Debit Receipt (Step 5): 21,400

 

Sales

Credit Invoice (Step 3): 30,000

 

Note:
1. Click here for the advances paid to the supplier.

2. Click here for the advances received from a foreign currency 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.

 

How do the “Balance Due” field works in the QuickBooks accounting software?

Software: Intuit #QuickBooks #accounting software

The “Balance Due” in the Sales Invoice is referring to an outstanding amount of a sales invoice after knocking off the payment received. It is useful for project-based business to show the balance due of a sales invoice when an advance payment has collected.

The Balance Due in QuickBooks accounting software

You can use the Make Deposit or a General Journal in QuickBooks to record an advance payment received from the customer. The journal of the transaction debits the Bank account and credit the Refundable Deposit Received account (an Other Current Liability account type).

If you are a Singapore GST register trader, you may have to issue a Sales Receipt to record an advance payment received with GST from the customer. If the deposit is a part payment, GST applied. If you are not sure in GST management, it is better to consult your accountant first before you record the entry.

When the Sales Invoice issued, it will debit the Accounts Receivable and credit the Sales account. Then, you pass a journal or use an Adjustment Note to reverse the refundable deposit received, which you have recorded earlier. You credit the Accounts Receivable and debit the Refundable Deposit Received account. This General Journal will contra off the refundable deposit that you have received and reduce the outstanding amount of the customer. Next, knock off the General Journal with the Sales Invoice, this process is to tag the payment to the invoice. The outstanding amount of the invoice will be captured in the Balance Due field, which you have inserted in the invoice form.

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Advance Payment to Supplier

Software: MoneyWorks accounting software

When ordering large quantity or high value of goods from supplier, often supplier requires you to place a deposit (or advance payment) before goods is being delivered or manufactured.

You need to create a non-stock item, Deposit, and associated this item with both Advances to Supplier (current Assets account) and Advances from Customer (current Liabilities account). Assuming you only deal with local suppliers and customers, then, both Advances accounts need to be associated with the standard rated GST code (G Code). According to IRAS, if deposit is form part of the payment, then, GST is applicable on payment made.

After creating your Purchase Order, process your order as Pay deposit for order, MoneyWorks will prompt you to record your payment information.

Assuming you paid a deposit of $10,000.00, a payment transaction will be added. The double entry for this transaction will be:

Debit Advance to Supplier account: 9,345.79

Credit Cheque Account (Bank): 10,000.00

Debit GST Paid account: 654.21

Deposit

When Purchase Invoice received from your supplier, process your order again as Receive goods with invoice. The deposited value will be automatically less off from your purchase invoice as a negative line item after your last item purchased.

Assuming the value of your item purchased is at $20,000.00, the double entry for this transaction will be:

Debit Stock asset account: 20,000.00

Credit Advance to Supplier account: 9,345.79

Credit Accounts Payable: 11,400.00

Debit GST Paid account: 745.79

With MoneyWorks, it simplified your accounting entry.