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    linasdg's Avatar
    linasdg Posts: 3, Reputation: 1
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    #1

    Jul 29, 2007, 02:01 AM
    Invoice issued to customer as down payment
    What is the correct journal entry for the invoice issued to customer as down payment?
    Zero's Avatar
    Zero Posts: 16, Reputation: 3
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    #2

    Jul 29, 2007, 03:14 PM
    If you are raising an invoice the entry would be credit sales or credit deferred income within the Balance Sheet (depending on the revenue recognition criteria set by the GAAP you are preparing the accounts under i.e. US GAAP, UK GAAP, IAS etc. The debit entry would be to debtors (accounts receivables).
    Zero's Avatar
    Zero Posts: 16, Reputation: 3
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    #3

    Jul 30, 2007, 12:55 PM
    See the edited entry above.
    Smith21000's Avatar
    Smith21000 Posts: 69, Reputation: 9
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    #4

    Jul 30, 2007, 01:10 PM
    The correct entry is to debit A/R and credit Deferred revenue (liability). Once the you have met the revenue recognition requirements per GAAP then you would debit Deferred Revenue (liability) and credit Sales Revenue. If you need to know what the revenue recognition requirements are please write back and we can go from there. :) In regards to the actual producing of the invoice your system is probably setup up by default to automatically debit A/R and credit Sales Revenue. Generally there is a drop down box which allows you to change where the credit will go, therefore change it to Deferred Revenue (liability). I hope this helps!
    linasdg's Avatar
    linasdg Posts: 3, Reputation: 1
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    #5

    Jul 30, 2007, 09:43 PM
    Thanks a lot, it answered my question. Yes I want to know more about revenue recognition requirements.
    Smith21000's Avatar
    Smith21000 Posts: 69, Reputation: 9
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    #6

    Jul 31, 2007, 06:43 AM
    The following link gives a simple explanation of revenue recognition: Revenue Recognition Principle

    If you need something more in depth I can also provide additional information or if your conducting business in the field of construction, oil and gas, or another unique industry where it may be hard to determine when revenues are realized or realizable and earned, let me know and we can proceed from there. Hope all this helps.

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