Design Services provider

The owner shall pay the consultant for the design services a total fee of RS 1000. Such fee shall paid to the consultant as follows.

First payment 20%

Second payment 30%

Third payment 40%

Final payment 10%

 

Client XYZ Co.

 

When issues an invoice of 20 % down payment upon signing the contract

Contract Value 1000

Payment 1000 *20=200

Vat 200*15%=30

When Cash received

Cash/bank (assets) Dr. 230

 To xyz co.                  CR. 230

 

Upon completion of the 1st stage of the contract

Xyz co. Debtors (assets)   Dr.  230

   To VAT output (liability)           Cr. 30

    To sales /revenue ( PL)          Cr. 200  

 

 

When 30 % sales is approved

 

Value 1000

Payment 1000*30

VAT 300*15%

Invoice recording in system

Xyz co. Debtors ( assets)  Dr. 345

To VAT output ( liability)     Cr. 45

To Sales/( pL)                          Cr. 300

 

 

When received cash

Cash/bank assets   dr. 345

To xyz co. Debtors (assets) 345

 

When 40 % of work done

Value 1000

Payment 1000*40%

VAT 400*15%

 

Invoice Recording in system

XYZ co. debtors ( assets) dr. 460

To VAT output(liability) cr   60

To sales ( (r/l)                   cr  400

When cash received

Cash/bank assets dr 460

Xyz co. debtors (assets) cr  460

 

 

When 10 % of cash and sales

 

Invoice recording in system

XYZ co. debtors ( assets) dr. 115

VAT output ( liability)      cr 15

To Sales ( PL)                      Cr 100

Cash received

Cash/bank assets       drl 115

To xyz co. debotrs ( assets)   cr. 115

 


 Journal entries in Consultant books

Payment schedule

Journal entries in Client books