Journal Entry payment to customer becomes invoiced amount

1

Hello,
I tried the below scenario, but was confused on the outcome.

  1. Made a payment entry PE-01 of 5/- from customer XYZ to my cash account.(Not linked to any inv, order etc). So this showed up as an advance, of 5/- when i looked it up in the Account Recievable report for the customer.
  2. Now i made a journal enty JE-1 from cash to XYZ customer of 5/-. (no reference to the above PE-01)

I was hoping that after second step, the Account Recvbl report will nullify the advance. But to my surprise i saw that in the report, the advance is still 5, and the invoiced amount is now 5/- (though i did not raise a invoice)

How do i nullify this advance payment taken from the customer. Do i need to reference the PE-1 anywhere in the JE-1.

2

It depends on the which account is getting debited and credited in the Journal Entry.

If you have Customer’s account debiting, then it will be treated as an invoice.

In the 2nd JV, you can link first JV to nullify the outstanding balance for the customer.

3

Thanks @umair i will try it out and let you know.

4

Hello @umair, so i tried the below:

  1. Made a journal entry JE-09 of 3/- from customer XYZ to my cash account.(marked as advance). In Account Recievable report for the customer i see 3/- in Total paid amount

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2. Now as per below video, i tried to create a new payment entry as ‘pay’ from my cash acct to customer XYZ. In the reference section i have selected the above JE.
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But i see that it gives me a error

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Kindly help with the query.

This is the video took help from (btw all your webinar videos are really amazing and helpful)

1 Like
5

Hello Umair, any help on this.

6

@kothagunda. If u want to nullify the impact of advance and invoice then u can use payment reconciliation option (match payment with invoices)

7

Thanks Umair. I will try it out.

8

Thanks @ushashmi