My client issued an invoice for a large sum, the invoice was for 2 seperate jobs. He has done one job and got paid for it, unfortunately the second job will not be started until the end of the next year. No materials has been bought for the second job yet. Clearly this second job does not relate to this financial period. What would be the best way to account for it at the end of the year, so the P&L looks more realistic.
If invoiced and part of sales but the work not yet done and no costs been incurred yet then best way to treat would be to defer all the sale so nothing showing in the P&L ie
I agree with Mark, you should post this to deferred income on the BS as this is income for which you have not yet provided the service. I had a similar situation last year with a client who had invoiced for some courses which were not due to start until her next financial year. I posted the lot to deferred income.
Our accountant has given me a year end journal to post along with creditors adjustments which he has told me to post as zero rated. I use Sage so even though balances showing as zero for creditors, when I print a creditors report the 2 transactions are displayed and I can't clear off in the bank as the VAT categrory is different. Can anyone please help/advise what I should do??
This happens when you are on cash accounting for VAT. You need to go into File - Maintenance - Corrections, pick one of the transactions and change the VAT code to be the same as the other transaction. You can then go back into Bank - Supplier and allocate one against the other. Then you need to go back into Corrections and change the VAT code back to what it was before. Doing this will not make any difference to the VAT return.
