Journal Entries of Advance Received Against Sales

In previous content, I explained about the journal entries for advance to employee. Our employee is also seller. He sells the service and today, we are talking about the journal entries of advance received against sales (physical products). So, there is big difference if you read both content.

No matter whether you sell the computer or property or shares. It is your revenue and after deducting expenses, it will be your profit or loss. Due to this, your capital will increase or decrease.

No matter whether you take advance from bank or against sale, it is your liability. Because you did not sell the product or service, we have to return this advance if we do not sell or we get sale return.

Following is the Journal Entries of Advance Against the Sales

1. When we have received advance against sales.

It will be the agreement between seller and buyer. We are keeping the books of seller. For example, seller is property dealer. Sale amount is big. So, buyer is unable to pay all the amount. Seller demands advance, so, confirm the agreement. So, buyer pays the advance against buying of his property. So, following entry will pass in the books of seller.

Cash/ Bank Account Debit

Advance Received Against Sales Account Credit

Logic of Entry : Seller has received the cash, it means, there is increase his current asset. So, every increase in current asset will be debited. This advance is unearned money because he received the money but still he did not sell the product ( In property selling case, both registry and possession is in the hand of seller at the time of taking advance from buyer). So, it is the liability of seller. If seller did not complete the agreement, he has to return advance amount to buyer. If you read my past content, my seller has returned my advance money because he was unable to sell me the property.

2. When Seller Adjust Advance Received at the Time of Actual Sale 

Advance Received Against Sale Account Debit

Cash / Bank Account ( Balance Amount ) Debit

Sale Account Credit

Logic of Entry  : If seller, you have already received advance in cash form, so, by debit this, we are decreasing our liability. Any decrease in liability will debit.  If any balance is pending, we will receive in cash which is increase in current asset and will be debit. Sales is our revenue. All the incomes and gains are credited because it is the increase in capital. Capital is the part of liability of business. It has to return to business owner or shareholder. So, revenue is increase of liability. Every increase in the liability will be credited.

3. When Seller Return Advance Received at the Time of Cancel the Sale Deal or Sales Return


Advance Received Against Sales Account Debit

Cash / Bank Account Credit

Logic of Entry :  We have debited advance received against sales because it has decrease our liability. With this, we current asset has also decreased. So, we credited cash account or bank account. Cash transferred from the pocket of seller to the pocket of buyer. 

COMMENTS

Comments on this Website: 2
Loading...
.
Share above Content to Your Friends



Name

access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting interest international Internet Introduction of Tally 9 inventory investment invoice IT Japan Job costing journal entries Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting otcei pakistan parents pay pal pdf pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching wikipedia working capital youtube
false
ltr
item
Accounting Education: Journal Entries of Advance Received Against Sales
Journal Entries of Advance Received Against Sales
Accounting Education
http://www.svtuition.org/2016/07/journal-entries-of-advance-received.html
http://www.svtuition.org/
http://www.svtuition.org/
http://www.svtuition.org/2016/07/journal-entries-of-advance-received.html
true
2410664366776677676
UTF-8
Not found any lecture VIEW ALL Readmore Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at vinod@svtuition.org for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock