I have receivable from my customer of Rs. 100,000 out of which Rs. 90,000 belongs to my supplier and Rs. 10,000 is my Income (Brokerage income). I have entered sales invoice and book Rs. 10,000 as my income but cant park the Rs. 90,000 amount in supplier’s account (supplier account is not showing there).
What is the way out of this as I can not book Rs. 100,000 as receivable in sale invoice as it will inflate my Sales (turnover) by 90,000.
Not received, its receivable and via bank receipt.
I have entered sales invoice of Rs. 100,000 (i.e. receivable from customer is debited) but I want my income to be credited by Rs. 10,000 only, remaining Rs. 90,000 is the amount I owe to my supplier. So where should I show this amount in Sales Invoice (as no option to enter supplier code is given)?
well, you’re missing the whole point of accounting. the if you create purchase invoice with bank receipt by spending of Rs. 90,000 (money out). and create sales invoice with bank receipt of receiving of Rs. 100,000 you get net Rs. 10,000 in profit and loss report.
Unless you’re the type doesn’t care that your customer knows who is your supplier. ask the supplier to give you receipt under customer’s name (not you) after you pay to him Rs. 90,000 then you issue receipt Rs. 10,000 (bank/cash) under your business name, give both of those receipts to your customer.done deal.
I it is not clear how you want to account for these transactions
Do you want your sales invoice to show the breakdown into your fees and the service/goods supplied or not - ie do you want your customer to see the breakdown?
If not then you will need to the sales invoice for 100,000 posting to an income account and then create a purchase invoice for 90,000 posting to the same income account.
If you want your customer to see the breakdown, then you can post two lines on the invoice - one to income for 10,000 and one to an expense or liability account for 90,000. Then raise a purchase invoice for 90,000 toi the same account
@Zain.Hemani, you have not mentioned what you are selling to the customer. Is this inventory? If so, its costs are automatically accounted for in the Inventory - cost account when you sell. You enter the sales invoice for the full amount, which will post to Inventory - sales by default, reducing Inventory on hand. The difference between your sale and your cost will add to Net profit.
Not an issue if my customer sees the breakdown. I want to do the same thing but that 90,000 is a specific liability to the supplier and I wanted to increase the payable balance of that supplier in the same sales invoice but that is not allowable in Manager.
No Tut, It is not the inventory. This is basically service provided to the supplier by my customer with the help of broker (myself). So I’m taking my share first before forwarding remaining proceeds to supplier.
It sounds like you have the relationships backwards. If the entity receiving the service is paying you for it, they are the customer, not the supplier. The entity providing the service is the supplier. But this is not the way you first described things. You originally said, "I have receivable from my customer of Rs. 100,000 out of which Rs. 90,000 belongs to my supplier and Rs. 10,000 is my Income (Brokerage income).
Since two different entities are involved, you cannot put all related transactions on one form. You must raise a sales invoice to the customer (who receives the service) for Rs. 100,000 and a purchase invoice from the supplier (the service provider) for Rs. 90,000. This will properly record your revenue and your expenses.
The sales invoice can be a single line item, in which case your customer will not know how much represents your fee. And your broker’s fees will not be specifically tabulated in your Profit and loss statement. They will simply be included in net profit. Or, it can be two lines, one for the service cost and the other for the broker’s fee. This approach will give you more visibility on the sources of income.
The purchase invoices will not mention the broker’s fee. It will include only the charges from the supplier.
Corrected statement: This is basically service provided to the customer by my supplier with the help of broker (myself). So I’m taking my share first before forwarding remaining proceeds to supplier.
So what I got the point is first create either purchase invoice with amount of 90,000 (payable to supplier credited and debited to suspense a/c or any other parking a/c) and then create sales invoice of 100,000 (10,000 credited to sales/brokerage income and 90,000 debited to the same suspense a/c or parking a/c)
That is the only way in order to avoid recording more sales/turnover.
Never use Suspense for anything. Suspense is for mistakes. Check with your accountant about this, but in my opinion, you should credit the full 100,000 to one or more of your income accounts and the 90,000 to an expense account. Your net profit will be 10,000 and your records will record your true revenue.
Your situation is no different from a merchant buying 90,000 of inventory and selling it for 100,000. You would not think, in that situation, of recording only 10,000 of sales.
I can not do so because here in our country there is also a concept of minimum tax of 1.25% on sales/turnover. The higher sales higher would be tax applied. So actual brokerage income should be recorded.
Well, I have created a temporary liability a/c for 90,000 and then copy to purchase invoice knocking off that liability a/c. with 90,000