Struggling with Invoicing Prepaid Service

[R. Victor Klassen]

It strikes me that when you post the invoice, you should get the full 5650 in accounts receivable, and the invoice
should be putting $5000 in liabilities -> unearned revenue and 650 in liabilities-> HST payable

There is a column in the invoice that indicates whether an item is taxable (typically checked by default), and one
that indicates that the item has tax included in the listed price.   Be sure the second one isn’t checked.

When you receive payment, it should wipe out the 5560 in A/R,  transferring to where-ever that payment goes
(undeposited cheques, chequing account, petty cash…)

If I recall correctly, you are required to use accrual based accounting, so putting having the HST and unearned revenue show up at the time of posting is the right thing.

On Oct 11, 2015, at 8:55 AM, Cyber-Wizard <kdavison at cyber-wizard.ca> wrote:

> I've been using Freshbooks for invoicing and expense tracking for my
> consulting business. It's time to move to something more full featured. As a
> longtime Linux user, GnuCash is the obvious first choice. I'm testing
> GnuCash 2.6.6 out now on Windows 10.
> 
> Many of my customers prepay for my time in blocks so I need to issue them an
> invoice upfront and deduct from the paid amount as I work. I think that I
> have the prepayment aspect working correctly but I'm struggling with Invoice
> payment.
> 
> When I create an invoice, 13% HST is added on to the invoice according to
> the tax table. For the sake of even numbers lets say the invoice is for
> $5000 + $650 in applicable taxes. When I post the invoice I get $5000 in
> Assets>Accounts Receivable
> $650 in Liabilities>HST
> This makes sense to me. 
> 
> When I receive payment. I would like to have the $5000 go into
> Liabilities>Unearned Revenue but I'm uncertain what to do with the remaining
> $650. Receiving payment of the posted invoice puts all $5650 into the
> Transfer account that I choose during the payment process. Obviously my
> customer shouldn't have the full $5650 at their disposal, but I'm uncertain
> what the logical steps would be to relocate that $650. I think my question
> is probably more of an accounting issue than a GnuCash issue but I suspect
> that I'll get better information here than elsewhere. Can anyone offer any
> advice on how I should more appropriately receive payment on an invoice?
> 
> 
> 
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