How do you remove unused portion of a monthly retainer from liability account?

GS-CFO · ‎November 04, 2019

I've seen and followed the Record a retainer or deposit article. Each month a customer pays a retainer $1500. If they only use $1000 in services of the retainer amount in the month, they lose the remaining $500 credit. After all the invoices and payments are completed, this $500 remains in the liability account. It is no longer a liability but should be income. How is this $500 liability removed from the liability account?

JamesM · ‎November 04, 2019

Hi there,

Welcome back to the Community. I'll be happy to share more info about removing the retainer from the liability account.

Based on what you've described, I recommend using Journal Entries to transfer the funds from account A to account B.

Journal entries can be used for a few different things, such as:

Enter debits and credits manually, like in traditional accounting systems.
Transfer money between income and expense accounts.
Transfer money from an asset, liability, or equity account to an income or expense account.

Here's how to create a journal entry:

1. Click the Create ⨁ icon and select Journal Entry.

2. Fill out the fields to create your journal entry.
3. Select Save and new or Save and close.

That's all there is to making journal entries in QuickBooks Online! I hope this helps get you back on track.

Let me know if you have any other questions.

View solution in original post

JamesM · ‎November 04, 2019

Hi there,

Welcome back to the Community. I'll be happy to share more info about removing the retainer from the liability account.

Based on what you've described, I recommend using Journal Entries to transfer the funds from account A to account B.

Journal entries can be used for a few different things, such as:

Enter debits and credits manually, like in traditional accounting systems.
Transfer money between income and expense accounts.
Transfer money from an asset, liability, or equity account to an income or expense account.

Here's how to create a journal entry:

1. Click the Create ⨁ icon and select Journal Entry.

2. Fill out the fields to create your journal entry.
3. Select Save and new or Save and close.

That's all there is to making journal entries in QuickBooks Online! I hope this helps get you back on track.

Let me know if you have any other questions.

GS-CFO · ‎November 04, 2019

Yup, that will work! I was not sure if there was a cleaner way to associate the transaction with month end.

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How do you remove unused portion of a monthly retainer from liability account?