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About contraction exp and Construction value

buddharaj bharati (accountant ) (36 Points)

23 February 2022

My Company Going to Construction new swimming pool value is 500000 and paid as an advance 50% by bank mode

my question is how to enter these types of accounts, which head and all expenses too (purchase material, labor charge, food, equipment)please help me

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6 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14803 Points)
Replied 23 February 2022

Pass Advance entry

Bank A/c Dr

To Advance Construction work A/c Cr

( being advance received )

Adjust Advance when full payment received

Expenses related to construction show under Direct Expense and remaining show as Indirect Expense in

Profit and loss Account

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buddharaj bharati (accountant ) (36 Points)
Replied 23 February 2022

how to pass journal entry receivable amount under which head???

prasad Nilugal ( GST Practitioner & Accounts ) (14803 Points)
Replied 23 February 2022

When you issue Invoice after completing construction work pass receivable entry

Trader Debtor's A/c Dr
To Construction work (sales)
( Booking of sales entry)

when you receive balance payment

Bank account. A/c Dr
Advance const work A/c Dr
To Trade Debtor's A/c Cr
( payment received after advance adjustment)

If GST applicable create input and output leaders
show necessary debit , credit .

buddharaj bharati (accountant ) (36 Points)
Replied 23 February 2022

same entry for the part amount received as per contract paper(50%,40%,10%) when we make invoice

prasad Nilugal ( GST Practitioner & Accounts ) (14803 Points)
Replied 23 February 2022

If you are receiving 50,40,10 =100% as advance payment then , same entry after Invoice , only adjustment entry , (Advance A/c Dr and Trade Debtor's A/c credit .)