Valued Order from Mohan:

We have received a valued order from Mohan, amounting to Rs. 20,000, for the supply of goods. Mohan has also made an advance payment of Rs. 12,000 along with the order. This indicates his commitment and interest in acquiring the goods from us. Let's dive into the details of this transaction.

Importance of Advance Payment:

The advance payment of Rs. 12,000 made by Mohan holds significant importance in this transaction. It serves as a gesture of trust and commitment from his end, assuring us that he is serious about the purchase and intends to follow through with the transaction. The advance payment acts as security for us, reducing the risk of any potential losses in case the customer cancels the order or fails to make the full payment.

Recognition of Revenue:

From an accounting perspective, the advance payment received from Mohan needs to be recognized properly. When we receive advance payment for goods or services, it is categorized as unearned revenue or a liability. This means we have an obligation to deliver the goods worth Rs. 12,000 to Mohan in the future.

Delivery of Goods:

As per the order, we are required to supply goods worth Rs. 12,000 to Mohan. The advance payment of Rs. 12,000 will be adjusted against the total value of goods supplied. This means Mohan will only need to make a payment of Rs. 8,000 (Rs. 20,000 - Rs. 12,000) upon the delivery of the goods.

Ensuring Customer Satisfaction:

In order to maintain a strong customer relationship and ensure customer satisfaction, it is crucial for us to fulfill the order promptly and deliver the goods as per Mohan's expectations. Meeting the agreed deadlines, providing high-quality products, and offering excellent customer service will help us build trust and loyalty with Mohan.

Finalizing the Transaction:

Once the goods are delivered and Mohan makes the remaining payment of Rs. 8,000, the transaction will be considered complete. At this point, we can recognize the full revenue of Rs. 20,000 in our financial records.

Conclusion:

Receiving a valued order worth Rs. 20,000 from Mohan, along with an advance payment of Rs. 12,000, is an encouraging development for our business. By ensuring timely delivery and maintaining customer satisfaction, we can solidify our relationship with Mohan and potentially attract more orders in the future.

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