Bookkeeping Question - Credit Against Future Charges

[Benjamin Soffer (SLF)]

Thank you for answering my accounting question.  Your answer raises a follow-up accounting question.  Is this truly “income?”  It seems like it only becomes “income” if an when I incur an appropriate conference room charge, but it has not ripened into “income” quite yet.

 

Benjamin E. Soffer ♦ THE SOFFER LAW FIRM PC

T  818.963.8998

21550 Oxnard Street, Suite 300

Woodland Hills, CA 91367-7109

 <http://www.soffer-law.com/> www.soffer-law.com

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Thank you.

 

 

From: Buddha Buck [mailto:blaisepascal at gmail.com] 
Sent: Sunday, December 18, 2016 12:21 PM
To: bsoffer at soffer-law.com; gnucash-user at gnucash.org
Subject: Re: Bookkeeping Question - Credit Against Future Charges

 

This is an accounting question, not a GnuCash question. But I'll give my answer anyway.

 

You have received an asset in the form of prepaid conference room charges. So create an asset account called "Prepaid Conference Room Overages" or something, and debit it with the amount of the "substantial credit". The other side of the opening transaction should be an income account, probably miscellaneous income.

 

When you have an appropriate conference use charge, debit the expense account you normally use, but credit the "Prepaid Conference Room Overages" account.

 

 

On Sun, Dec 18, 2016 at 3:11 PM Benjamin Soffer (SLF) <bsoffer at soffer-law.com <mailto:bsoffer at soffer-law.com> > wrote:

Hello,



In the suite where my office is located, I have the right to use the common
conference room for a fixed number of hours per month.  I have to pay an
hourly rate for use of the conference room when I exceed the fixed hours
limit.  Recently, there was a huge problem with the telephone system in the
suite, so the landlord agreed to give me a substantial credit on his books,
which I can use only if and when I incur future charges for conference room
use (but not against regular future rent).  How do I account for this credit
in my own books?



Thank you,

Ben



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