Dear Sir ,
I am working in a construction company as a sub contractor , just now we are started our construction work . No capital invested , we are received 100000 ( Approx ) from our main contractor as an advance for the work and we are managing our overheads and expenses from that .we are using tally.ERP 9 for accounting , we entered the cash receipt as
Cash a/c Dr
To main contractor ( Sundry Creditor )
We are doing the construction work for them so it is right to put them as a sundry creditor ?
Shajahan from Kuwait (10/31/2011 1:44:58)
Taking of advance before doing work is just like current liability of your business. It is just OK, if you show main contractor as sundry creditor. But, if you buy many things on credit at that time, you can create doubt by passing this entry and keeping advance from main contractor in simple sundry creditors. Simple way is just create a group of advance and keep it under current liability. Now create ledger Advance from Main contractor or simple main contractor under this advance. And Pass following entry in receipt voucher.
Cash Account Dr. 100000
Main Contractor ( Advance) Cr. 100000