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How to In lieu of locked system accounts

Started by Troy Haines -   in Accounting


I have received a single $10,006.92 payment into my company bank account from a customer. This single payment includes payment for 2 outstanding invoices totalling $5003.46 and the remainder - $5003.46 is for services yet to be rendered.

In other accounting systems I have used Manual journals to accomplish these entries. In lieu of not being able to use system accounts when doing manual journals in Xero, how do I mark these 2 outstanding invoices as paid and reconcile half of the $10,006.92 payment? Then, how do I enter into Xero the remaining balance of the payment which equates to $5003.46 ready to be allocated to future invoices?

Many Thanks,
When you are coding the transaction from the bank rec screen, match the payment to the two invoices then below the match section you have option to add a new transaction, receive money and then change Direct Payment to Overpayment or Prepayment. Overpayment puts the amount onto the receivables account; Prepayment you need to code to income that is being received in advance, eg sales account. Using Prepayment takes into account the GST on the income, overpayment doesn't.

Margaret Haines  

Thanks Margaret,

I have used the overpayment option and applied credit to the existing invoices.in relation to GST comment and overpayments, The invoice line items have a tax rate of GST on income and the invoice tax setting is set to tax exclusive. When totalling the invoice xero has added gst and i have then applied the overpayment credit to this amount. This seems like the desired result im after

Does this sound right in terms of dealing with gst on the invoices and Using the overpayment feature?


Troy Haines  

Hi Troy, yes your GST is correct for using Overpayment. If you'd used Prepayment option that would then have required you to account for GST. I generally use Overpayment for the issue you had.

Margaret Haines