Double Entry Question

Hi,

I have a couple of double entry questions, and would really appreciate some help:

Deposits in Advance

This is to do with a company who sells an item to a customer. The customer pays at the time of ordering, the company (A) sends the order to another company (:), who deliver direct to the customer. As B does this, it sends the invoice to A.

Now, say the customer orders on the 30th March and company B doesn’t deliver (and invoice) company A until 2nd April. When preparing a trading and profit & loss account for company A for March, you can’t include the sales revenue from this order as there is no cost of sale to match against it until the invoice is received from company B. Is this correct?

In that case, you have to transfer the sales revenue for that order to the balance sheet as a liability (deposit in advance). If you wanted to generate a profit and loss statement like this every month you would need to deal with this situation quite frequently. So, is the double entry/journal:

31st March

DR Sales
CR Deposits in Advance (Liability)

To prepare the P&L and balance sheet at the end of March. Then:

1st April

DR Deposits in Advance (Liability)
CR Sales

To continue on in April, and then carry out the same process at the end of the month? Are there any other accounts I would need to be concerned with in this situation? Also, what happens in April when company A receives the invoice on the 2nd? Now there is a cost of sale, but in the P&L for April the sales revenue doesn’t go because it relates to March. I feel like I am missing something blindingly obvious!

Transactions Pre-Current FY

For example, say a company finishes its financial year on March 31st. You are running accounting software and have entered all your opening balances for April 1st, including trade creditors of £15,000.

On 15th April, you make a payment of £5,000 for an invoice from March which was included in your trade creditor balance. To account for this, is the double entry:

DR Trade Creditors
CR Bank

Therefore reducing both the trade creditor balance and the bank balance? So as you continue paying the remaining £10,000 invoices from the previous year, the trade creditor balance would reduce to zero (assuming no more credit purchases were made)?

I am trying to get the process correct in my head for these two examples, and really, the process of moving items to the correct accounts to prepare a P&L and balance sheet each month. Thanks in advance for any help!