I've come to my year end and I have a number of invoices that were raised, deposits taken on account and which are not going to be paid until the job has been done (into the new financial year). The purchases that relate to this have not actually occurred yet although the goods are on order (using sage instant so no orders raised through SAGE).
I've noticed that the unpaid invoices are showing in the end of year sales figure which is obviously not correct so I need to carry out journal entries to sort this out. Problem is, I get really confused with what I'm debiting and what I'm crediting. So, am I debiting the "creditors" nominal and then crediting the "sales"? Or is it the other way round.
An accountant told me a good way of remembering how to do this, but I didn't write it down
I've come to my year end and I have a number of invoices that were raised, deposits taken on account and which are not going to be paid until the job has been done (into the new financial year). The purchases that relate to this have not actually occurred yet although the goods are on order (using sage instant so no orders raised through SAGE).
I've noticed that the unpaid invoices are showing in the end of year sales figure which is obviously not correct so I need to carry out journal entries to sort this out. Problem is, I get really confused with what I'm debiting and what I'm crediting. So, am I debiting the "creditors" nominal and then crediting the "sales"? Or is it the other way round.
An accountant told me a good way of remembering how to do this, but I didn't write it down
Many thanks
You need to DR Sales CR Deferred Income which will be a balance sheet item. You will then do the reverse of this once the job is carried out and the money becomes due.
Thanks Matt123. That's answered my question perfectly.
matt123 wrote:
Jonular wrote:
I've come to my year end and I have a number of invoices that were raised, deposits taken on account and which are not going to be paid until the job has been done (into the new financial year). The purchases that relate to this have not actually occurred yet although the goods are on order (using sage instant so no orders raised through SAGE).
I've noticed that the unpaid invoices are showing in the end of year sales figure which is obviously not correct so I need to carry out journal entries to sort this out. Problem is, I get really confused with what I'm debiting and what I'm crediting. So, am I debiting the "creditors" nominal and then crediting the "sales"? Or is it the other way round.
An accountant told me a good way of remembering how to do this, but I didn't write it down
Many thanks
You need to DR Sales CR Deferred Income which will be a balance sheet item. You will then do the reverse of this once the job is carried out and the money becomes due.
