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• # 80729
• Mon 12 Mar 2012 11:19 AM

I have a client who hires table and chair linen for weddings.  She sends an invoice on booking for 50% and bills the rest 10 days before the event.  As these are weddings, quite often the invoices relate to bookings for later in the year after her business year end.  As the income relates to next year (paid in advance), should I journal the amounts from Sales across to an accrued sales account for next year.  I'm having a total mental block on this one and any advice would be gratefully received.  Thanks. x

• Andrea Blake AICB CB Cert. PM Dip.
  www.approachaccounting.co.uk

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• # 80730
• Mon 12 Mar 2012 11:50 AM

Hi Andrea,

I have the opinion that the sale should be posted under accruals and then post a journal to bring it back into sales on the date of the event.  In this way the reporting of Sage will be correct as the sales will then be listed in the month which they occur.

If your customer is VAT registered it becomes more complex - HMRC always over complicates, a cunning job creation policy I think! - as HMRC state that the VAT is payable at the point when the deposit is no longer refundable.

You could also issue a pro-forma invoice for the full amount and state on it that 50% payment is required on presentation of the pro-forma and then convert to an invoice on the date of the function.  This could have the effect of your clients customers becoming creditors rather than debtors which in turn would require a tweak of the chart of accounts to allow the debtors figure to be listed under current liabilities or under current assets.

Neil 

• Neil
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• # 80732
• Mon 12 Mar 2012 12:38 PM

Thanks Neil, this is what I thought, just needed reassurance I think.
My customer is not VAT reg'd (thank goodness). 
Suppose I'd better set up a diary note to remind me to journal the amounts at the correct time.   
Thanks again. xx 

• Andrea Blake AICB CB Cert. PM Dip.
  www.approachaccounting.co.uk

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• # 80733
• Mon 12 Mar 2012 12:44 PM

Just looking on the COA, I've got a 2109 n/c called accruals, but I'm not convinced that this is the right place for it as it falls under the Creditors Short Term section.  Surely this should go somewhere else on the balance sheet as it is technically a negative debtor??? Sort of???  Do I need to create a new nominal code under the Current Assets??  Aaaargh

• Andrea Blake AICB CB Cert. PM Dip.
  www.approachaccounting.co.uk

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• # 80782
• Tue 13 Mar 2012 11:35 AM

Hi Andrea,

It will appear as a liability because that's what it is unless non-refundable.  If you are generating and posting invoices in Sage then a Pro-Forma is the way to go, if you enter invoices as batches then all you need to do is receipt into the bank account as a customer payment 'on account', when the balance is paid this first payment can then be put against the invoiced figure.  If you do it this way you will not need to worry about posting journals for accrued income. 

Neil 

• Neil
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