Accounting Entry Example 5: Prepayment with Withholding
This scenario assumes the following:
-
Supplier is subject to 31 percent withholding.
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Prepayment for 1000.00 USD gross.
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Withholding is not postponed.
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Payment to supplier is 690.00 USD.
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Withholding payment is scheduled for 310.00 USD.
-
-
Regular voucher for 5000.00 USD.
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1000.00 USD of prepaid voucher is applied.
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Payment to supplier is 2760.00 USD.
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Withholding payment is scheduled for 1240.00 USD.
-
Prepaid Voucher
Accrual (voucher posting):
| Description | Account | Debit | Credit |
|---|---|---|---|
|
Prepaid Expense |
122000 |
1000.00 USD |
N/A |
|
Accounts Payable |
200000 |
N/A |
1000.00 USD |
Payment (payment posting):
| Description | Account | Debit | Credit |
|---|---|---|---|
|
Accounts Payable |
200000 |
310.00 USD |
N/A |
|
Withholding Liability |
203000 |
N/A |
310.00 USD |
|
Accounts Payable |
200000 |
690.00 USD |
N/A |
|
Cash |
100001 |
N/A |
690.00 USD |
Applied Regular Voucher
Accrual (voucher posting):
| Description | Account | Debit | Credit |
|---|---|---|---|
|
Expense |
631000 |
5000.00 USD |
N/A |
|
Accounts Payable |
200000 |
N/A |
5000.00 USD |
|
Prepaid Expense |
122000 |
N/A |
1000.00 USD |
|
Accounts Payable |
200000 |
1000.00 USD |
N/A |
Payment (payment posting):
| Description | Account | Debit | Credit |
|---|---|---|---|
|
Accounts Payable |
200000 |
1240.00 USD |
N/A |
|
Withholding Liability |
203000 |
N/A |
1240.00 USD |
|
Accounts Payable |
200000 |
2760.00 USD |
N/A |
|
Cash |
100001 |
N/A |
2760.00 USD |