Deferred Income?

crispy Registered Posts: 465 Dedicated contributor ? ? ?

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


Dr Sales
Cr Accruals

Thanks for any feedback :001_smile:


    OLD FOOL Registered Posts: 1 New contributor ?
    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.
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