Retainers

[David Langer]

Hi again,

Here's another take on the retainer (called in this case, an "escrow
account"), suggested at
http://en.allexperts.com/q/Accounting-Payroll-Pension-1418/accounting-principles.htm#b
,

Answer
> I would debit the escrow cash account and credit a liability account titled
> something like "Retainers Paid."
>
> When billing against the retainer, I'd:
>
> Debit the regular cash account
> Credit the retainer account
> Debit the "Retainers Paid" account
> Credit a fee revenue account
>
> I hope this helps.
>
> Michael LoGiudice
>

However, this still shows the escrow account as an asset account.


On Sat, Sep 25, 2010 at 3:01 PM, Keith Bellairs <keith at bellairs.org> wrote:

> The "client retainer account" is the liability subaccount of the bank
> account you described for retainers. "Services rendered" is an income
> account -- sales. You probably want one for each client?
>
> The "retainer account" is the bank account (asset) that you deposited the
> retainer in. Its balance increased when you debited the client's subaccount.
> The "regular account" is the bank account that you keep your money in. When
> the balance in the "retainer account" is positive (more cash in it than
> offsetting liabilities to clients), then you have earned the right to move
> that balance from the retainer account to your money.
>
>
> On Sat, Sep 25, 2010 at 2:41 PM, David Langer <dlangerpi at gmail.com> wrote:
>
>> Can you please let me know where these accounts are located, that is, what
>> type of accounts they are?
>>
>> Thanks
>>
>> On Sat, Sep 25, 2010 at 2:28 PM, Keith Bellairs <keith at bellairs.org>wrote:
>>
>>>                                   Dr           CR
>>> Client Retainer             1,000
>>> Services rendered                       1,000
>>>
>>> Retainer account                        1,000
>>> Regular account          1,000
>>>
>>> Accounting for the income is one transaction. Moving the money around
>>> because it is now yours is another. Of course, you can do it as one set of
>>> splits, or you could sweep money out of the retainer accounts periodically.
>>>
>>> I don't use the invoicing tools so no comment on that part, except that
>>> obviously there is no balance due. The invoice is reporting the fee earned,
>>> the amount charged to the retainer, and - perhaps - the remaining balance of
>>> the retainer.
>>>
>>>
>>>
>>> On Fri, Sep 24, 2010 at 11:52 PM, David Langer <dlangerpi at gmail.com>wrote:
>>>
>>>> Hi,
>>>>
>>>> I'm trying to set up a liability account for client funds which will be
>>>> allocated to sales when they are paid (retainers).
>>>>
>>>> This is the situation:
>>>>
>>>> A client would pay a retainer, which would be deposited to a bank
>>>> account
>>>> especially for this purpose. At the same time, I will have set up a
>>>> liability sub-account account for this client, as in fact, the deposit
>>>> is a
>>>> liability.
>>>>
>>>> In GnuCash I will credit the liability sub-account to the bank account.
>>>>
>>>> But here's the part that confuses me (so far): what happens when a job
>>>> associated with that client is paid (in part, for example), by the
>>>> retainer?
>>>> How do I move the money from the retainer bank account, to sales, and at
>>>> the
>>>> same time, account for the change in the liability sub-account? Even
>>>> more
>>>> confusing, how to invoice, and then account for the payment?
>>>>
>>>>
>>>>
>>>>
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>>>
>>
>>
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>
>


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