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Best answer January 07, 2019
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Hello there, @Mrjan.
I'd be glad to help track customer prepaid services in QuickBooks Online (QBO).
If your PayPal is connected to QBO, you may need to track the transactions manually. If not, you may follow the steps provided below.
First, you'll need to make sure that you have an appropriate accounts set up on the Chart of Accounts. For this, you'll need an income account and a liability account to track the unearned income.
- Go to the Gear icon.
- Select Chart of Accounts.
- Click New.
Income Account
Liability Account (Unearned Revenue)
Next, you'll need to set up the service items that you'll use in the workflow. You'll need to set up three items.
- Service item mapped to the income account
- Service item mapped to the liability account
- Bundle item
- Go to the Gear icon.
- Select Product and Services.
- Click New.
Service item is used to record revenue, this item should mapped to the income account created. This item can also be used when the business sells an individual lesson.
Service item mapped to the liability account created, this is used when the customer redeems a prepaid session. Make sure to use the discounted price.
Bundle item is used when selling package to the customer. This will use the item created that is mapped to the liability account. The price of the bundle item is the sum of the prices of the components. Don’t check the box Display bundle components when printing or sending transactions, the customer doesn’t need to see the component parts.
After creating the accounts and items, you'll need to record the sale of the package. Create an invoice or sales receipt to sell the package to the customer. Use the Bundle item on the invoice and record the other required details about the transaction. This will credit the Unearned Revenue account.
Next, create a delayed charges for each lessons using both the liability service item and revenue service item. The next amount of the delayed charge will be zero. Keep in mind that Delayed Charges are non-posting transactions and will not be reflected on the general ledger until they are added to an invoice. The prepaid session item should be entered as a negative quantity in order to reduce the liability account. The regular session item should be entered as a positive to record the revenue earned.
When the customer redeems a session, create an invoice and add the delayed charge to the invoice from the drawer. This will create a zero net invoice and create the entry to debit the unearned liability account and credit revenue.
That would allow you to track customer prepaid services. Feel free to add a comment below if you have any other concerns by adding a comment below, we're always here to help. Have a good day!
Hello there, @Mrjan.
I'd be glad to help track customer prepaid services in QuickBooks Online (QBO).
If your PayPal is connected to QBO, you may need to track the transactions manually. If not, you may follow the steps provided below.
First, you'll need to make sure that you have an appropriate accounts set up on the Chart of Accounts. For this, you'll need an income account and a liability account to track the unearned income.
- Go to the Gear icon.
- Select Chart of Accounts.
- Click New.
Income Account
Liability Account (Unearned Revenue)
Next, you'll need to set up the service items that you'll use in the workflow. You'll need to set up three items.
- Service item mapped to the income account
- Service item mapped to the liability account
- Bundle item
- Go to the Gear icon.
- Select Product and Services.
- Click New.
Service item is used to record revenue, this item should mapped to the income account created. This item can also be used when the business sells an individual lesson.
Service item mapped to the liability account created, this is used when the customer redeems a prepaid session. Make sure to use the discounted price.
Bundle item is used when selling package to the customer. This will use the item created that is mapped to the liability account. The price of the bundle item is the sum of the prices of the components. Don’t check the box Display bundle components when printing or sending transactions, the customer doesn’t need to see the component parts.
After creating the accounts and items, you'll need to record the sale of the package. Create an invoice or sales receipt to sell the package to the customer. Use the Bundle item on the invoice and record the other required details about the transaction. This will credit the Unearned Revenue account.
Next, create a delayed charges for each lessons using both the liability service item and revenue service item. The next amount of the delayed charge will be zero. Keep in mind that Delayed Charges are non-posting transactions and will not be reflected on the general ledger until they are added to an invoice. The prepaid session item should be entered as a negative quantity in order to reduce the liability account. The regular session item should be entered as a positive to record the revenue earned.
When the customer redeems a session, create an invoice and add the delayed charge to the invoice from the drawer. This will create a zero net invoice and create the entry to debit the unearned liability account and credit revenue.
That would allow you to track customer prepaid services. Feel free to add a comment below if you have any other concerns by adding a comment below, we're always here to help. Have a good day!
