OK. I understand now. It's a prepayment of some kind, so money actually has changed hands.
It's all going to depend on how you conduct your business. The simplest thing to do is just recognize it as revenue as a sale (Revenue:Sales). If you rarely or never have to pay customers back that's fine. For example, let's say you accept a $600 down payment on a $1200 job. Once the job is complete, the customer pays the final $600. Here's how you'd record it. 2015/1/1 Down Payment Assets:Checking $600 Revenue:Sales 2015/1/1 Contract Complete Assets:Checking $600 Revenue:Sales If you want to keep track of prepayments separate from completed contracts, create a subaccount (Revenue:Prepayments), but then you'd have to have a (more) complicated transaction at contract completion to close out the prepayment. 2015/1/1 Down Payment Assets:Checking $600 Revenue:Prepayments 2015/2/1 Contract Complete Assets:Checking $600 Revenue:Prepayments $600 Revenue:Sales Wait a minute. Why is the Prepayments amount positive? I'm taking something out of that account. Shouldn't it be negative? Not if you're reading that correctly. What it's saying is that the customer paid off the entire contract at completion (Revenue:Sales). $600 of that $1200 was in the form of a payment into your checking account (Assets:Checking). The other $600 was a prepayment (Revenue:Prepayments). It would look the same if instead of a prepayment the customer paid the whole contract off at the end and you put $600 into a savings account instead. Now, if you have to pay the customer back for failure to complete the contract, then you didn't really recognize revenue any more than getting a loan from the bank that you have to repay counts as revenue. At contract completion, the liability goes away, so at that point you'd recognize it as revenue. In that case, just replace "Revenue:Prepayments" in the previous example with "Liabilities:Prepayments" 2015/1/1 Down Payment Assets:Checking $600 Liability:Prepayments 2015/2/1 Contract Complete Assets:Checking $600 Liability:Prepayments $600 Revenue:Sales On Friday, May 8, 2015 at 1:56:04 AM UTC-7, Kev Lau wrote: > > Hi Steffan, > Yes. You are right. It does seem strange. I have put 1 example below. > Please see and advise how would you write this in your ledger. > > Hi Rick, > See below. > Thats a chart I am trying to follow > > Balance Sheet > Assets : Cash, Account Recievables, Supplies, Equipments, > Cost_of_Goods > Liability : Notes Payable, Account Payable, Wage Payable, > UnEarnedRevenue > Equity : Common Stock, Retained Earnings, > Income Statement > Revenue : Service Revenue , Investment Revenue > Expenses : Wage Expenses, Rent, Depreciation Expenses etc. > > Example of UnearnedRevenue: > So for example the cash advance of 6 months (without making any delivery) > he will have a cash reciept of 600 but no revenue. > He only earns his revenue (by making delivery) > It will be: > Assets:Cash $600 but also in his Liability there will be $600 which will > be Liability:UnEarnedRevenue $600 > Each month he delivers there will be a addition into the Serviced Revenue > account. > Which will show the income statement to increase by $100 . > > Wouldnt this entry above look like this in ledger:- > > Assets:Cash $600 > Liability:UnearnedRevenue $600 > > Or how would you write this into your ledger. I am most likely doing to > wrong. > > > > On Thursday, May 7, 2015 at 4:52:16 PM UTC+7, Kev Lau wrote: >> >> Hi, >> I am still having difficulties with coming up with a proper mean of using >> a ledger for my business. I am hoping that someone here could see my Ledger >> and tell me if it looks sound. I don't want to make alot of entries and >> later realize I have been doing it wrong. I have read some material on >> accounting and feel that I understand how to make entries(but not sure how >> well I am organized and structured) >> >> Below is a sample of my hypothetical testing ledger. If you could have a >> look and give me some advise/tips I would deeply appreciate it. >> >> >> >> #GENERAL_ELECTRIC:ASSETS:CASH:CITIBANK US$-12,998.06 ;cash >> recd, debit to cash acct. >> #GENERAL_ELECTRIC:LIABILITIES:ACCOUNT_PAYABLE:VENTURE_ENTERPRISE US$ >> 12,998.06 >> >> #GENERAL_ELECTRIC:EXPENSES:BANK:CITBANK:FEES US$-19.35 ;cash paid >> out credit to cash acct. >> #GENERAL_ELECTRIC:EXPENSES:BANK:CITIBANK:FEES US$-77.41 ;cash paid >> out credit to cash acct. >> #GENERAL_ELECTRIC:ASSETS:BANK:CASH >> >> #GENERAL_ELECTRIC:ASSETS:CASH:CITIBANK US$-4,998.06 >> #GENERAL_ELECTRIC:LIABILITIES:ACCOUNT_PAYABLE:VENTURE-ENTERPRISE US$ >> 4,998.06 >> >> #GENERAL_ELECTRIC:EXPENSES:BANK:CITIBANK:FEES US$-34.19 >> #GENERAL_ELECTRIC:EXPENSES:COST_OF_GOODS_SOLD:TRIA_SOLAR:INV004 >> US$-12,000.00 >> #GENERAL_ELECTRIC:EXPENSES:BANK:CITIBANK:FEES US$-34.19 >> #GENERAL_ELECTRIC:EXPENSES:COST_OF_GOODS_SOLD:DYNO_WORKS:INV004 >> US$-3,808.00 >> #GENERAL_ELECTRIC:ASSETS:CASH:CITIBANK >> >> #GENERAL_ELECTRIC:REVENUE:SALES:MICROSOFT:INV004 >> >> US$6,000.00 >> #GENERAL_ELECTRIC:ASSETS:RECEIVABLES:INV004 >> US$-6,000.00 >> >> >> -- --- You received this message because you are subscribed to the Google Groups "Ledger" group. 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