My boss wants me to setup a grant for $75,000 booked as Deferred Revenue and to create an entry on the liability side as a Grant Liability? He received 75,000 as deferred revenue and another 75,000 as liability. Just trying to figure out what is the best way to enter these two items into QB Online?

Question

Deferred Rev & Liabiity Entries

Forum|Forum|7 years ago
November 28, 2018
1 reply
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QuickBooks Online

If I am interpreting your questions correctly, you are have $75,000 you are receiving as a grant, but then you also owe $75,000 out to someone else. I will answer based on this interpretation.

Create an "current liability" called deferred revenue. In accrual basis this is where you would post revenue that you haven't yet earned. This account would carry a credit balance. The debit to this entry would be to the checking account.

For the outgoing funds, create an "current asset" and name it accordingly (i.e. accrued liability(for what)). In accrual basis this is where you would post an expense that has been paid, but not yet delivered (think of it like paying rent in advance for the upcoming month). This account would carry a debit balance and the credit would be to the checking account when the payment is made.

If I assumed the questions incorrectly, please feel free to reach out and provide additional details, so your questions can be answered more accurately.

qbteachmt

Level 11

Don't forget you have more entries to make, later.

If you Spend it, that is when you Relieve the Prepaid account to Income, and the Liability account to the actual Expense you just paid for.

And this only applies if that Grant is a reimbursement Grant. If that is Yours to keep it all, that is income when you get it. There is no Deferral, if you have full access to the resource it provides. And there is no Liability, unless you are an accrual basis entity and have committed funds.

Example:

A Town gets construction funds as they Expend the funds to pay for construction, so they have Income every time they get repaid. If they got the full amount in advance, that is Restricted Income until the Restricted purpose is met and the restriction is lifted (met) and not Deferred income as Asset.

Also, your username is "SCorp" so is this a Business or a Charitable Organization or a Governmental Entity? Because typical Businesses as S Corps get Income, not Grant as Deferred or Liability.

S

SCorpAuthor

The grant only has to be paid back if we do not have 50% of our staff based in Ohio or have not raised $2,000,000 in investments.

SCorp is the first letter of my first name and the first 4 letters of my last name. Just a coincidence. :)

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