advance payment to supplier

[ustina]

I made advance payment to the Supplier,,,about 10000, and the goods still not arrive. Where i should put this figure in Balance Sheet, under current liability or Debtors account? Please help

 

[Scalloway]

Money you pay out that is not a P & L expense will appear on your balance sheet as an asset.

 

[ustina]

Money you pay out that is not a P & L expense will appear on your balance sheet as an asset.

Thank you...but am confuse now,,,i get answer from someone else.... I should put as a capital advance under current liability ...

 

[Scalloway]

If someone pays money to you that is a liability because you must pay that money back. If you pay an advance to some one else that is an asset beacause they must pay you back.

Or to look at it another way. You had an asset of £10,000 in your bank account. You now have an asset of £10,000 that must be repaid to you.

And if you put it in as a current liability your balance sheet won't balance.

 

[ustina]

the advance payment will reduce my liability to another supplier... for who i owe 160000, then total liability would be 6000....or am wrong?

sorry , mistake....16 000

 

[Scalloway]

Why would a payment to one supplier reduce your liability to another?

How your balance sheet might look before making the payment

Assets ..................£5,000
Bank...................£11,000
Total assets.........£16,000


Liability to Supplier A...£16,000
Total liabilities.............£16,000

After paying the money in advance

Assets ..................£5,000
Paid in advance....£10,000
Bank.....................£1,000
Total assets.........£16,000


Liability to Supplier A...£16,000
Total liabilities.............£16,000

After you receive the goods

Assets ..................£5,000
Stock..................£10,000
Bank.....................£1,000
Total assets.........£16,000


Liability to Supplier A...£16,000
Total liabilities.............£16,000

 

[ustina]

thank you very much ....OMG... so all my accounts wrong..because sameone give me wrong advice...




my Balance sheet look like this

Current assets..
cash and bank .......2196

Liability to supplier A (16,000)
capital advance to Supplier B 10,000
short loan to Director ( 27,327)

total failing within one year ( 33,327)
Total Nett assets ( 31131)


Capital and reserve 1
Retained loss ( 31132)

its my first year of trading...completely lost...

 

[Scalloway]

Your balance sheet looks fine. If you haven't filed them yet change the capital advance to Debtors.

 

[ustina]

i filed already,,,,but i do not make any nots about total failing with one year creditors,,, ( capital advance, director loan..) just put the total figure.....should i make adjustment?

 

[Scalloway]

If you think the accounts do not meet the Companies Act you can file amended accounts.

http://www.companieshouse.gov.uk/infoAndGuide/faq/amendingAccounts.shtml

 

[ustina]

i mean i keep the notes just internaly