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Extra resources for CTH Finance for Tourism and Hospitality
As far as the customer is concerned the sales invoice also has a number of purposes: It is a reminder of the goods or services that were provided, their cost and when the amount due should be paid. As with the seller the invoice can be used to enter the purchase of the goods or service into the accounting records at some suitable time. There are no rules as to when the invoice is sent out. It does not always accompany the goods or services. In many instances where an invoice is for the provision of a service then the invoice will be sent out to the customer after the service has been provided.
These are to be written-off. The debtors account and the bad debts account for the year will be as follows. Debtors Opening balance b/f Sales £ 8,600 44,000 Opening balance b/d 52,600 3,000 Debtors Debtors Cash Bad debts Bad debts Closing balance c/d Bad debts £ 180 P&L a/c 420 600 £ 49,000 180 420 3,000 52,600 £ 600 600 In the sales ledger, personal accounts of the customers whose debts are bad will be taken off the ledger. The business should then take steps to ensure that it does not sell goods on credit to those customers again.
Only a thorough check of the supporting documentation will determine the invoice's validity. Many of the invoices that a business receives will be for goods. These may be raw materials that are to be made into a product, items being purchased for resale or other items necessary for the running of the business such as stationery or restaurant supplies. If goods of any type have been purchased then there should normally have been a purchase order sent out for these goods. In order to ensure that the invoice received is for goods that are genuinely required by the business and that have been correctly purchased and authorised then the invoice should be matched to the related purchase order.