Deferred Income?

crispy

Hello,

I wonder if anyone could help with the correct treatment of the following:-

Company Year End is September, a Sales Invoice was issued in July for goods that were not actually received and shipped to customer until the following January. The Purchase Invoice from supplier is dated January, should a provision be set up as at September as,

Dr Purchases
Cr Accruals

or

Dr Sales
Cr Accruals

Thanks for any feedback :001_smile:

OLD FOOL

Depends on Original Transaction

The sale needs to be reversed.

The answer depends on how the sale invoice was introduced into the books of account. The original entry would have been as follows:

Dr Cash if the customer for the goods or
Dr Debtors Control Account
Cr Sales

The correction would be as follows:

1. if it was a cash sale:
Dr Sales
Cr Accruals

2. If it was a credit sale:
Dr Sales
Cr Debtors Control Account.

Hope this answers your question.