I have a liability account setup for a job deposits we get from customers for construction projects. We received a large deposit which will be used for materials and sub labor. When I make purchases for the job I would like to deduct these from the liability balance as they are purchased. Is this possible? Only way that would seem to work is using the service item Job deposits but this doesn't allow me to track in each account like job materials and sub contractor expenses.
I've got a solution to record these transactions, CTLLC.
When you record the purchases, you can make them billable to the customers. Then, add the purchases to the invoice and enter the pre-payment on the second line.
Here's an article for more details: Record a retainer or deposit.
Please let me know if you have more questions.
So I read that article a little closer then the first time I saw it. So I can just create a invoice for the purchases and then apply the invoice amount as a negative against the deposit service item.
Any way to match this against transactions that appear in my bank feed in QuickBooks?
An option is not to post a deposit directly to a liability account when you receive it, but rather to record it with a Receive Payment. This leaves a credit on the customer's account in AR. The advantage of this is that you can easily see the remaining balance at any time.
When you purchase materials or pay sub-contractors, check the Billable column on the Bill, Check or Expense. That creates an Unbilled Expense, that you can convert to an Invoice. This will automatically be applied to the previous credit, if you left the default setting, showing the amount remaining at the bottom of the invoice.
A credit in AR shows as a negative asset on a balance sheet, which is not technically correct, so if you publish a balance sheet while any open credits are in place, create a Journal Entry on b/sheet date, to move the total open credits amount from AR to a current liability, and reverse it the next day.