How do you record payments before invoicing? Unearned Income?

kochumai · ‎January 30, 2021

So 3 questions, assume accrual basis for accounting:

1) How to utilize the Unearned Cash Income Account, for recording a customer payment before invoicing them?

2) If I were to record unearned income, I would make a liability account called Unearned Income, then I would make a Journal Entry for that customer to debit Undeposited Funds and credit Unearned Income. And after I've preformed the job or have provided them with their product, I'd make another Journal Entry to debit Unearned Income and credit my Income account -transferring their payment out of a liability and into my revenue.

3) Is this how you would log Unearned Income in quickbooks or should you use the Unearned Cash Income Account to do it -if so, going back to Q#1, how??

HyJohn · ‎April 14, 2021

This is how I do this and it is really simple.

Make a deposit and put "Account's Receivable" in the account column. Make sure the customer field had the correct customer. This will automatically record the payment as an un-applied payment. Then when you create the invoice, just apply this credit to the invoice and it's all done. No need for anything else. It just reduces your A/R until the invoice is made.

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How do you record payments before invoicing? Unearned Income?

How do you record payments before invoicing? Unearned Income?

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