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How to make the accounting entry that the company pays the deposit first and then the final payment?
When an enterprise purchases goods, some suppliers need the purchaser to pay a part of the money as the down payment, and then pay the final payment after receiving the purchased materials. How to make accounting entries for the business of paying the down payment first and then the final payment?

An accounting entry that pays the deposit first and then the final payment.

1. When the enterprise prepays the payment to the supplier,

Debit: advance payment

Loans: bank deposits

2. The enterprise receives the purchased materials.

Borrow: raw materials/inventory goods

Taxes payable-VAT payable (input tax)

Credit: advance payment

3. When paying for the goods

Debit: advance payment

Loans: bank deposits

How much is the advance payment?

Advance payment refers to the amount paid by an enterprise to a supplier in advance in monetary funds or monetary equivalents in accordance with the provisions of the purchase contract. In daily accounting, prepayments are recorded according to the actual amount paid, such as prepayments for materials, purchases, and prepayments for agricultural and sideline products that must be paid first and then recovered.

Prepaid accounts belong to the asset category, where the borrower registers the prepayment made by the enterprise to the supplier and the lender registers the prepayment received by the enterprise for the purchased goods that should be carried forward. At the end of the period, the debit balance reflects the prepaid payment that the enterprise has paid to the supplier but has not yet delivered. If it is the final credit balance, it reflects that the enterprise has not paid for goods and services.

What is the raw material?

Raw materials refer to all kinds of raw materials, main materials, outsourced semi-finished products and auxiliary materials that do not constitute product entities but contribute to product formation.

Raw materials include raw materials and main materials, auxiliary materials, outsourced semi-finished products, spare parts for repair, packaging materials, fuel, etc.