Struggling with Invoicing Prepaid Service

Wm... tcnw81 at tarrcity.demon.co.uk
Mon Oct 12 16:09:46 EDT 2015


Mon, 12 Oct 2015 06:51:09 
<8FBB0037-E933-45CC-B0B8-7BB803FA5EE1 at gmail.com>
R. Victor Klassen <rvklassen at gmail.com> wrote...

>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…)

This looks right to me

OP: note the AR shows services + tax = 5650 not 5000, AR is the amount 
you expect to receive, the split is done at the time the Invoice is 
posted.

Last bit of the chain is reducing Liabilities:Unearned and increasing 
Income:StuffDone as you do work for the customer.  Depending on how many 
customers you have, how many are long term, etc it may be worth building 
your accounts tree like so:

Liabilities
.. Unearned Revenue
    .. Cust 1
    .. Cust 2

as that way gnc will be able to report on your position with each 
customer in balance sheet type reports.


>
>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.

I think in their original example the OP didn't want the customer to get 
the credit until they had paid.  To do this a Pro Forma Invoice (I'm in 
the UK may be called different things elsewhere) is used (in gnc terms 
it is a "print out" of an invoice *before* it is posted).  When the 
customer pays or agrees to pay, the invoice is then posted creating the 
liabilities for tax (see below) and to do work up to a value for that 
customer.

not gnc specific: One more thing to consider in an idle moment, if HST 
has rules like VAT *and* there are longish gaps in the invoice, 
prepayment, provision of service sequence then the tax point may 
actually be quite a bit later than the invoice date.  Governments rarely 
cry if you pay them earlier rather than later, though :)

>
>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?
>>
>>
>>
>> --
>> View this message in context: 
>>http://gnucash.1415818.n4.nabble.com/Struggling-with-Invoicing-Prepaid-
>>Service-tp4680958.html
>> Sent from the GnuCash - User mailing list archive at Nabble.com.
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-- 
Wm...



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