How to properly record a musician/artist advance - loan, recoupable, expense?
So we have a record label, and when an artist is signed they may get 2500 or 5000 or however much, as an advance.
Previously I was putting this in as reducing my cash account and entering it as a straight expense "Musician Advance". These are recoupable costs Though.... the artist has to pay back 100%.
So I'm changing this from a straight expense, I believe this should be "Other Long Term Asset" and be a receivable account.
Going back months where I've reconciled this, I think the issue is that this should affect cash flow, but not profitability because it's still an asset. Not an expense.
I need to recreate the entries from before today... because I can't edit them to change them from an expense to something else. My question is, if it's not an expense, in quickbooks online... what is it?
My best guess.. Is this recorded as a transfer from checking to A/R for that musician? The problem with doing that though, is that it looks like a payment on a loan. I would think it's not a transfer.... b/c it's not going to an account, it's going to a person.... So Another option I thought is set the musician as a vendor, pay them and increase the A/R on long term loan asset for that person. but again that records that as an expense.
If someone can help me straighten this out.
Most times this happens, we give the artist an advance, and recoup money over time to pay it off.
In one other event... the company paid for something for an owner/officer, which he paid back. We again had that as an expense, in the Loans to Officers, and recorded his cash deposit to our bank account against it. But again, I'm thinking the item the company paid for... is again not an expense...