Question

If a customer paid 9,000 for merchandise to be delivered in August and September would I...

If a customer paid 9,000 for merchandise to be delivered in August and September would I journal it as

Prepaid merchandise 9000
Cash. 9000
Business   Accounting   
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Answer #1

In the books of customer /Buyer-

Supplier advance a/c dr ....9000

to Cash account ...............9000

(being cash paid to supplier in advance for merchandise to be received later in august and september)

When merchandise received -

Merchandise a/c dr.........9000

to Supplier advance a/c ..9000

(Being merchandise received)

In the books of Supplier /seller ..

Cash a/c dr...............9000

to customer (advance)..9000

(Being cash received in advance from customer)

Customer advance a/c dr...9000

to sales..............................9000

(Sale of goods for which payment already received)

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