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Level 2

Clearing customer invoice using funds from deferred revenue account

This one customer invoice will have its invoice cleared using funds from the deferred revenue account. As of now, there will not be a recurring schedule of payments using this method, and it will be a one time situation.

 

If I were to use funds from the deferred revenue account to clear this customer invoice, would I just do the standard "receive payment" process for this customer invoice? Would I just have the customer invoice paid in full as normal and then make a journal entry to use the funds from this deferred revenue account?

2 Comments
Moderator

Clearing customer invoice using funds from deferred revenue account

Hello, @I am here.

 

You are right in making a journal entry to transfer the amount to the deferred revenue. Before we proceed with the steps, I highly suggest consulting your accountant or accounting professional for guidance on which account receives the debit and credit side of the transaction. To ensure your records are correct.

 

To create a journal entry in QuickBooks Online (QBO), here's how:

  1. Click the + New button in the left navigation menu.
  2. Select Journal entry
  3. Fill out the fields to create your journal entry.
  4. Pick Save and new or Save and close.

For future reference, visit our Community page where you’ll find resources that will help grow and manage your business.

 

Keep me posted if you have any additional questions, as I'm always here to help. Take care.

Level 11

Clearing customer invoice using funds from deferred revenue account


@I am here wrote:

This one customer invoice will have its invoice cleared using funds from the deferred revenue account. As of now, there will not be a recurring schedule of payments using this method, and it will be a one time situation.

 

If I were to use funds from the deferred revenue account to clear this customer invoice, would I just do the standard "receive payment" process for this customer invoice? Would I just have the customer invoice paid in full as normal and then make a journal entry to use the funds from this deferred revenue account?


@I am here 

If you have earned the revenue and you're on an accrual basis, you can write a journal entry to recognize the revenue. However, if you're on a cash basis, I would wait until the invoice is paid by the customer and then write a journal entry. Hope this helps!

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