Recording deposits for supplier purchase orders

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  • Updated 2 years ago
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?
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Posted 2 years ago

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Shayne McNamara

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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.
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Glenda Veale

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Hi, I have set up an asset account called "Deposits Paid" and record to that account.  When the final invoice is paid allocate to expense account and bring back the deposit amount.