Accounting for Deferred Income

You can run a report for your Deferred Income Account, @Derrick124.

Let me share some information with you so you’ll be able to track which customer has deposits on file and when it was.

Chart of Accounts has a complete list of your accounts in the program. From there, we can run a QuickReport for the Deferred Income account. Let me show you how:

1. Go to the Lists menu.
2. Choose Chart of Accounts.
   
3. Locate the Deferred Income Account on the list.
4. Select the Reports dropdown at the bottom, then click QuickReport.
   
5. Select Customize Report and make sure the column has Date, Memo and etc. under the Display tab.
   
6. Under the Filters tab, select Customer type.
7. Press Ok to display the details.
   

You can also use the Transaction Detail by Account report to track them. Just ensure to use the customize feature to include the information you need the most.

Moving forward, you can record the customer’s prepayment by creating a deposit transaction as the work progresses. This method enters the advanced payments of the customer, so you can easily apply or link it to the invoice. Here’s how:

1. Go to the Banking menu and choose to Make deposits.
2. Enter the necessary details in the field.
3. Press Save &Close.

Let me know if you have other concerns. I’ll be here to help. Have a good one.

Hi Madelyn,

Thank you for responding, pulling the reports does give me all the info on who has a deposit on file but if that number increases drastically, I would still have to do the tedious work of sorting through each name till I find the client I'm looking for. 

How do I record prepayment for the client? I think that is the best way to go 

I’d be glad to guide you through the steps in recording prepayment to your client, @Derrick124.

To record a prepayment in your QuickBooks Desktop (QBDT) software, you can start with on receiving your client payment. The payment received will be applied to your client’s future invoice. Let me guide you how.

1. Navigate to the Customers menu and select Receive Payments.
2. Enter the amount and needed information.
3. In the lower-left corner, select the LEAVE THIS CREDIT TO BE USED LATER then click the Save & Close button. 
4. Click OK in the pop-up message letting you know that the over-payment will remain in your client's account.

To track your client prepayment or over-payment, click the Customers menu from your home screen. From the left side, the negative balance means your client has an open balance. 

You can also pull up the A/R Aging Summary report and customize it to that specific client. Here's how:

1. Go to the Reports menu.
2. Select Customer & Receivables.
3. Click A/R Aging Summary.

Then, to apply the Prepayment to your client:

1. Click the Customers menu and select Create Invoices.
2. Fill in the needed details to complete the invoice and click the Save & Close button.
3. Open the Invoice you’ve created for your client and click Apply Credits from the top corner.
4. From the Apply Credits window, select the available credit for your customer and click Done. 
5. Your client invoice will now be marked as paid.

In case you need to personalize your invoice and add some information you want your clients to see. You can utilize this article that can guide you through the complete details: Use and customize form templates.

Know that I’m only a few clicks away from you. Whenever you have follow-up questions about recording prepayment in your QBDT software, you can always leave a reply in this thread. Have e great day ahead!

This is helpful. But, what i fyou need to inovice your customer in advance of collecting payment for a prepaid service (an annual subscription)? We created invoices in this case and need to aplly the revenue in the correct period both now and when payment is received. Currently invoices were created in February and are due Feb 15th for an annual service that starts on March 1. What should the QB workflow be? We have the current desktop premier plus edition. Thanks so much!

Hello! We need to crate inovices for clients in advance of collect payment for prepaid annual subscriptions. So, for example, we create invoices 2/1 and email to customer with 2/15 due date for an annual subscripton that starts 3/1. We defer the revenue monthly until the end of the covered subscription year. How would we do this when payment is made prior to 3/1 and when it si mad after 3/1?

Thanks,

I can help you out with this, @JRblt.

You can enter a delayed credit so you can use it in the future once your new subscription year allows.

Here's what you need to do:

.Step 1: Create a delayed credit

1. Select + New.
2. Select Delayed credit.
3. In the Customer dropdown, select the customer's name
4. Enter the details, such as the date and the amount. 
5. When you're done, select Save and close.

This saves the delayed credit. You can choose to apply it to the invoice you sent out on 2/1 fore the upcoming year's subscription. 

Step 2: Apply the delayed credit to an invoice

Keep in mind that adding a delayed credit to an invoice from a prior accounting period will affect that period's balances. When you want to apply this payment to your invoice, here's what you'll do:

1. Select + New.
2. Select Invoice.
3. In the Customer dropdown, select the customer. This opens a window with all open transactions for the customer, including invoices and delayed credits. Note: If you don't see this, select the small arrow next to the invoice Balance Due.
4. Find the delayed credit and select Add. This adds the credit as a line item to the invoice.
5. Fill out the rest of the invoice as needed.
6. When you're done, select Save and close.

You can read more about delayed credits by checking out this article: Create and apply credit memos or delayed credits in QuickBooks Online.

if that doesn't work for you, or of you have additional questions just leave a comment below and we can look at other options. Take care! 

Hi Madelyn, 

I am part of a non-profit organization and we recently received a donation to be used for our general expenses. Our accountant however suggested that we handle it as deferred revenue and spend it in the next 4 years instead of spending it on just the current fiscal year. Let's say the donation is $10000, how do I manage this in Quickbooks desktop so it shows in our balance sheet as $2500 in donation for the next 4 years? Thank you.

Peegee