We regularly place Purchase Orders with overseas suppliers. These suppliers require a deposit of 20% or 30% in order to produce the goods. How do we best record these payments prior to receiving the goods?
We have a chart of accounts asset code call Prepaid Overseas Payments. We code all deposit and part payments to this account (there is no GST impact) as usually we will pay 30% on order and 70% when the goods are shipped so in both cases fully paid before the stock arrives. Then when the stock arrives we process a journal to take it into purchases.