Excess payment received - to adjust against next invoice

Vikas Damodar Garud vikas at techqual.com
Sat Sep 1 10:35:56 EDT 2012


Hi,

I provide consulting assistance on behalf of one institute.  This is my 
customer.  I raise invoices on the Institute, which are paid by the Institute.

Recently, the Institute made an excess payment - by oversight - for one of the 
invoices.  It was noticed immediately after the online payment was confirmed.  
We agreed to treat the extra payment as advance for the subsequent invoice.  I 
did it in following way (Figures for example)

Invoice No. 1:  Invoice amount:  100
Invoice posted as:
Work done (Income: Fees received):  100

Payment computation by Institute:
Invoice amount for the work:  100
Tax Deducted at source (TDS):  10 (Credited to my account with income tax)
Excess payment:  15
On-line payment in bank account:  105

Process payment in GnuCash by me:
Bank deposit (Asset:Bank):  105
TDS (Asset:TDS):  10
Payment against invoice (Asset: Account Receivable):  -100
Excess payment for advance against next invoice (Income: Fees received):  -15

Invoice No. 2:  Invoice amount:  85 (100 - 15)
Invoice posted as:
Work done (Income: Fees received):  100  (It happened to be for same amount)
Advance (Income: Fees received):  -15

Payment computed by institute
Invoice amount for the work:  100
Tax Deducted at source (TDS):  10 (Credited to my account with income tax)
Advance paid with previous invoice:  15
On-line payment in bank account:  75

Process payment in GnuCash by me:
Bank deposit (Asset:Bank):  75
TDS (Asset:TDS):  10
Payment against invoice (Asset: Account Receivable):  -100
Advance payment with previous invoice (Income: Fees received):  15

In receivable ageing report, I see 15 as overdue, which is not correct.  
Institute has made all the payments.

My very limited knowledge of accounting does not help me in finding out the 
mistake.

What is the mistake?  How should I handle this?

Thanks
Vikas Garud


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