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+--- Thread: How to journalize Goods Receipt with Downpayment ? (/thread-how-to-journalize-goods-receipt-with-downpayment)
How to journalize Goods Receipt with Downpayment ? - surfol - 07-14-2011
How to journalize Goods Receipt with Downpayment ?
Accounting problem
Company XYZ makes a Purchase Order to company ABC for 10 pcs of item A @ 1,000 each. The total amount based on the PO is 10,000. It also pays a downpayment of 5,000 by Cash.
Company ABC send the items ordered in 2 separate shipments as follows
Shipment 1 Company ABC send only 4 pcs of item A and is received by Company XYZ warehouse.
Shipment 2 Company ABC send only 2 pcs of item A and is received by Company XYZ warehouse.
It also sends Invoice as follows
Invoice 1 Instead of charging 1,000 per item as in the PO, it charges 1,100
Invoice 2 Instead of charging 1,000 per item as in the PO, it charges 1,100
This is how I journalize it, but I'm not sure if it's correct
Making the PO and paying Downpayment
Downpayment Dr. 5,000
Cash Cr. 5,000
Receive Shipment 1 using Goods Receipt
Inventory - A Dr. 4,000
Accrued Accounts Paybale Cr. 4,000
Receive Invoice 1
Inventory - A Dr. 400
Accrued Accounts Paybale Dr. 4,000
Downpayment Cr. 4,400
Accounts Payable Cr. 0
Receive Shipment 2 using Goods Receipt
Inventory - A Dr. 2,000
Accrued Accounts Paybale Cr. 2,000
Receive Invoice 2
Inventory - A Dr. 200
Accrued Accounts Paybale Dr. 2,000
Downpayment Cr. 600
Accounts Payable Cr. 1,600
Is that the correct way to journalize it? When goods are received, I use the price from the PO to get the amount. When Invoice is received and there's a price difference I use the price from the Invoice. I also deduct the amount from Downpayment when I receive the Invoice not when goods are received.
So, if anyone can help me out, it'd be greatly appreciated. thanks!
- Dard - 07-19-2011
In XYZ's accounts
Purchase must be recorded when the goods are recieved.
The downpayment's entry
Dr Recievable 5,000
Cr Cash 5,000
On first delivery
Dr Raw material 4,000
Cr Recievable 4,000
On second delivery
Dr Raw material 2,000
Cr Recievable 1,000
Cr Cash 1,000