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pjmitchell55
Level 3

Retainage Receivables - QBDT -

Using 2020 QuickBooks Premier Contractor Edition  (DESKTOP)

I have read articles here, and everywhere regarding retainage receivables in QuickBooks Desktop.  Here is what I did and what happened.

 

1) have account "Retainage Receivable" as "other current asset"

2) have item as "Retainage", with income account as "Retainage Receivable.

 

Created a test invoice for $1.00 for work done, but with a NEGATIVE amount for "retainage" of 45 cents, leaving a balance due of 55 cents.  This is correct.

 

HOWEVER ... when I do this, it DOES show Retainage Receivable as 45 cents, which is great, BUT it shows the 45 cent retainage as income (in a cash basis report). but NOT the 55 cents.  This is NOT correct.

 

NEXT ... I tried having the item "Retainage" having an income account as "construction income".  The problem with THIS is that the retainage amount will not show up in the separate "Retainage Receivables" account, only in the general "Accounts Receivable.

 

My objective is to get the retainage amount to show as a separate item from general A/R.  And the retainage amount NOT reflected in income until it is paid.

Help?  And thank you.

 

2 Comments
Catherine_B
QuickBooks Team

Retainage Receivables - QBDT -

Hello pjmitchell55, 

 

I can share how our reports are generated. 

 

An accrual-basis report shows income regardless of whether your customers have paid your invoices and expenses regardless of whether you have paid all your bills. A cash-basis report on the other hand only shows income if you have received cash and expenses if you have paid cash. Be sure that you selected the correct accounting method and the report's date range. 

 

You can pull up the report again and try to toggle the Accounting method and report period correctly to see the difference. For more details in handling your reports, you can use these references: 

 

Let me know if you have other questions. Take care!

pjmitchell55
Level 3

Retainage Receivables - QBDT -

Thank you for your response.  I do understand the difference between accrual and cash reports - we actually use both for various reasons.  However what is confusing is the Sunburst Software article that has been reference in other posts says this:  "As I stated earlier in this article, this is the easiest method – because it’s just adding two additional items to the bottom of your invoice and all the math and work is done for you; however, the amount of retainage that you deducted shows up in your Profit & Loss Report in your Income Account (even if you run the reports on a Cash Basis) which does require that a Journal Entry be created to remove this from your Income.  You should consult your accountant for the proper entry.

 

I don't want to have to do a journal entry every time we invoice a client.

 

I'll keep researching and experimenting, but any other input welcome.

 

Thank you!

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