Contract Questions

Ted,

I would think of your "earned" and "unearned" funds as I would a "Customer Deposit". A "Customer Deposit" is money received from a client for work to be performed in the future. Therefore, it is not revenue although I receive cash but it is a liability since I must provide the service or goods.

To handle the situation, I would create the "Customer Deposit" account as your "Deferred Revenue" account. You should set-up an item that allows you to invoice the "deferred revenue" with the offset going to the liability account as opposed to the revenue account. Progress billings would then have the revenue item with the deferred billing item on the same invoice drawing monies from the deferred revenue account.

So, the deferred item is called "Deferred". You invoice a client for $100 in Deferred that increases AR and increases the Liability. The client pays you, decreasing AR and providing cash. When you bill the client on an invoice using your revenue item, "Sales", for $100 then the next line in the invoice is the "Deferred" item for -$100.

Works extremely well. I have had up to 150 of these little buggers running around at any one time in the "Customer Deposit" account. I reconcile the liability account each week to a "zero" balance. BB is always $0 and EB is always $0. Withdrawals must match a deposit. Outstanding items are "active".

Bob,

Thanks. Is there a report that can be generated that will give a customer detail transactions summary of so the client can receive a monthly statement?

Do you use an invoice or sales receipt to record the initial customer deposit? Would it not overstate your AR?

Thanks

----- Original Message ----- From: "Bob" Newsgroups: alt.comp.software.financial.quickbooks Sent: Wednesday, January 03, 2007 1:21 AM Subject: Re: Contract Questions