• EH Lim

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 account when selling' field of the product to allow it to use in Sales Invoice transaction.

Step1: 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.

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.

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.

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

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.

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.

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.

The statement of account shows all the invoices and receipt.

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. Reference: Advance payment to the supplier.

  2. Reference: Advance 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.

#deposit #Advancepayment #Invoice #MoneyWorksAccountingSingapore #DesktopAccountingSystems #Cloudbasedaccountingsystems

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