Based on Terms and Conditions between seller and buyer, the seller has a right to collect an advance payment against supplying of goods, the received advance amount will appear in seller books of accounts in the balance sheet under current liabilities as an advance from customers.
Example
Wisdom media agreed to supply of goods worth of Rs.2,00,000/- to Raj Enterprise and the terms & conditions are below.
1.40% Advance and remaining against delivery
2.5% Vat extra
Path: Gateway of Tally -> Accounts Info -> Groups > Create
Name: Advance from customers
Path: Gateway of Tally -> Accounts Info -> Ledgers > Create
Name: Advance from Raj Enterprises
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Name: Raj Enterprises (Sundry debtors)
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Name: Sales@5%
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Name: Output vat@5%
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When advance received from a customer, you need to record the below accounting entry in seller books of accounts.
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Record sales invoice entry in seller books of accounts.
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You need to record the following receipt entry adjusting advance received amount.
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