Retainers and prepayments can be recorded in Accounting Seed as a cash receipt. When a cash receipt is created a debit to cash and a credit to Unapplied cash will be created. Accounting Seed will track pre-payments and/or retainers in the unapplied cash GL account by default.

If you would like to track retainers or pre-payments in a GL account other than unapplied cash simply override the credit gl account on the cash receipt to a pre-prepayment liability account. As cash is applied to billings the liability GL account set on the cash receipt will automatically be relived.

Summary of steps

  1. Create a cash receipt for the customer once cash has been received.
    • Set the credit gl account to a prepayment liability gl account.
    • Set the amount to equal the amount of cash received.
  2. As services are partially and/or fully completed, create a billing to customer and Post
  3. Apply the amount of the billing from the cash receipt
  4. Send an invoice to the customer if there is a remaining balance to be collected.

Sample Ledger Entries

Below is a sample of ledger entries into the general ledger when the Credit GL account on the cash receipt is overridden.

 Event  GL Accounts  Debit  Credit
 1. Create cash receipt  1000-Cash 
 2000-Prepayment 
 $100  
 $100
 2. Create Billing   1200-Accounts Receivable 
 4100-Service Revenue 
 $100  
 $100
 3. Apply cash receipt to billing   2000-Prepayment 
 1200-Accounts Receivable 
 $100  
 $100

 

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2 Comments

  • 0
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    Jeanae Remala

    I am having problems following step #1 agove. Where do I set the credit G/L account?  The Cash Receipts screen does not have anywhere for you to select the credit account, only the bank account.

  • 0
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    Rebecca Ralls

    Hi Jeaneae, it looks like the field is either missing from your layout entirely, or for some reason, your profile does not have permission to view that field.  You (or your sys admin) should check those two things first.

    Here's where that field usually is:

    Edited by Rebecca Ralls

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