Dinesha shetty (Articled assistant) (53 Points)
11 January 2010ABC school collects school fees trice in a year (i.e. during June, October and January).The academic year of the school is from June to March.
The school wants to recognize this revenue as business income on accrual basis. The school follows financial year ie Aprill to March for accouting. It incurs expenses throughout the financial year.
Please let me know how to recognize the revenue i.e. school fees throughout the fiancial year with journal entries?
| Originally posted by : Dinesha shetty | ||
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ABC school collects school fees trice in a year (i.e. during June, October and January).The academic year of the school is from June to March. The school wants to recognize this revenue as business income on accrual basis. The school follows financial year ie Aprill to March for accouting. It incurs expenses throughout the financial year. Please let me know how to recognize the revenue i.e. school fees throughout the fiancial year with journal entries? |
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THE ENTRY WILL BE........CASH A/C. DR. TO SCHOOL FEES A/C CR. THE FEES FOR THE MONTH OF APRIL THAT SCHOOL COLLECTS IN THE MONTH OF MARCH WILL BE TREATED AS ADVANCE FEES RECEIVED. THIS ANSWER IS GIVEN WITH THE ASSUMPTION THAT SCHOOL COLLECTS FEES FOR ALL 12 MONTHS, NOT CONSIDERING HOLIDAY MONTHS....................THE SCHOOL INCURS EXPENSES THROUGHOUT FINANCIAL YEAR IS IRRELEVANT HERE.........
ABIR KUMAR DEB
(Student-CA FINAL(New))
(153 Points)
Replied 11 January 2010
First of all, read the laws and regulations of the school regarding fees structure.See whether the fees has been revised or not, Debit the students name one by one and credit school fees account by seeing the fees structure(due).whenever cash is collected, debit cash and credit students' name.As far as recognizing revenue is concerned on accrual basis,it will be automatically done when you credit the school fees by studying the relevant fees structure.when you will be crediting the students name after receiving cash,u will automatically get the balance due.
Amir
(Learner)
(4016 Points)
Replied 12 January 2010
Dear Dinesha, As per Appendix to AS-9 on Revenue Recognition -
This means that revenue can be recognised only during the academic session...i:e when classes are going on...
If you creat ledger of each student in your accounting softwate it is too lenghtly to control for short est way, you can maintain seperate controlling system for fees receipt may be in excel or In a seperate software. Entered receipt on the date of receipt of amount debit Bank and credit to Fees Account.
At the end of the Financial Year you can calculate the receivable fees through the seperate Fees control system. So as on 31st March debit the 'Fees Receivable' account (to be shown in Assets side of B/S) and credit to 'Fees Receipt' Account (Top be shown in credit side of Income expenditure Account).
From 1april onwards when ever you get the fee amount related to march debit to Bank/cash Account and credit to Fees receivable account.
Hope this will clear to you.
>> Rajesh
25 Hours GST Scrutiny of Return and Notice Handling(With Recording)
Survey, Search and Seizure under Income Tax Act 1961
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