Accounting question : Payment on account/ journal entry?

Question

A firm pays Rs.10000/- ( on account ) to Mr.X (labour charges dues) on 1/1/07. However no bill/invoice is submitted by Mr. X as he would submit the final bill later. The firm passes the following entries on 01/01/07:
Labour charges a/c. Dr. 10000
To Mr. X a/c. 10000
( Being labour charges due to Mr. X)

Mr. X a/c. Dr. 10000
To Bank A/c. 10000
( Paid on account to Mr. X)

On 15/03/07, Mr. X submits his final bill of Rs. 15000/- ( which includes 10,000/- booked earlier).

How should the firm now book the final bill of Rs. 15000/- dated 15/03/07 ..as 10,000/-
of the above has already been booked on 01/01/07.
Please guide me how to journalise this bill of 15000/- , keeping in mind the the journal entry of 10000/- passed on 01/01/07 as charges due.

Answer 1

You have already taken Rs. 10,000 to the income statement, so now you only need to take in the remaining Rs. 5,000. Your entry:
Dr Labour charges a/c 5,000
Cr Mr X a/c 5,000.

Mr X's final bill should state that the services provided totalled Rs. 15,000, less interim payment Rs. 10,000, balance payable Rs. 5,000

Answer 2

dr labour charges 5000
cr cash