[GNC] Account for contracted grain sales?

[John Ralls]

> On Nov 4, 2019, at 4:22 AM, Nate Bargmann <n0nb at n0nb.us> wrote:
> 
> I am just getting started with GnuCash (should have done so long ago...)
> and my main occupation these days is farming.  I've been using a simple
> cash accounting system all of these years and I am able to configure my
> accounting in GnuCash to get an even more realistic view of my finances
> as time goes on.  Thank you!  In the future, i.e. next year, I will be
> taking on the role of treasurer for our church which is the principal
> reason I started with my personal finances so as to gain familiarity
> with GnuCash.
> 
> One thing I have done for years is enter into a deferred payment
> contract with the cooperative that buys my grain.  In general the grain
> is sold as of a given date with payment at some future specified date.
> In my case I generally defer payment until the beginning of the coming
> calendar year.  What this represents, at least to me, is a transfer of
> the title of my asset (grain) to the cooperative immediately and then
> sometime in the future a payment from the cooperative for my asset.
> 
> Other than my copies of the contract(s), I've not tracked this in any
> way, which I would now like to do.  At first I thought of structuring
> this as an Account Receivable but skimming through that section of the
> manual, it doesn't look like quite the right fit.  As I see it, I have a
> sort of promissory note that doesn't pay interest, if that makes any
> sense, that in early January will be paid by the cooperative.  It is
> future income but I don't want it listed as such until next year.
> 
> Of course, I could always let it ride until the funds are deposited in a
> couple of months.

How you handle this depends on two things: The tax consequences and whether anyone else looks at your books.
If you're not taxed on the sale of the grain until the following year and your books are likely to be audited or used in a friendly discussion with the tax man--a situation consistent with "cash accounting"--then you don't want to recognize the transfer until you actually get paid. In that case just credit income:sales and debit your bank account. If you owe the tax when the grain is transferred or you have other ways of presenting your records in a tax audit then you can just create two accounts: Assets:Sold Grain and Income:Grain Sales. When you deliver the grain to the coop you debit Assets:Sold Grain and credit Income:Grain Sales. When you get paid the following January you credit Assets:Sold Grain and debit your bank account.

Regards,
John Ralls