Paid Beginning Balance, not showing as revenue?

[will]

Here's the problem:

PT 2007
Accrual Based
Starting 01/01/06

I had a customer who owed $850 in 12/05 and paid in 01/06.

When I setup PT I made an account 3010-01 Beginning Balances - Customer (Equity-does not close)

Setup the customer with a Beginning Invoice Balance of the date 12/1/05, and linked it to the A/R account of 3010-01

Applied the customer Payment in 1/1/06, and all looks good with the bank account balance.

However, the Revenue YTD is not showing the $850?

Thanks in advance,

Will

[Lorin Browning]

You may need to decide whether the Beginning Balance account is an Equity Account (as you seem to claim) or whether it is an Income Statement Account (as you seem to expect). It cannot be both. But am I missing something?

[will]

You may need to decide whether the Beginning Balance account is an Equity Account (as you seem to claim) or whether it is an Income Statement Account (as you seem to expect). It cannot be both. But am I missing something?

I was using it as an Equity Account after doing many searches and reading the PT help, using it as an Income account gives me the results I am looking for.

I guess my question is, should I use it as an Income account?

Thanks very much Lorin.

Will

[Lorin Browning]

Since the revenue was apparently recognized in a prior period, what should be showing on the books as an accounts receivable or as a loan receivable is an Asset Account with a beginning balance of $850.

Asset accounts are Balance Sheet accounts and do not impact upon the Income Statement accounts.

The asset account would show a balance of $850 on the first day of the current period--January 1, 2006. When the cash was received on January 6, there would be a credit to the asset account and a debit to cash.

The credit to the asset account will zero out the balance in that account and the debit to cash increase the amount in the Cash account (which is probably the main checking account) by $850.

I am assuming from your question that this is the first year of using Peachtree. If it is not, then the $850 should already be on the books.

If this is not the first year that Peachtree is being used, then your question may be how to record an unrecorded sale from a prior year with payment received in the current year. If that is the question, please let us know. If that is your question, then the answer becomes a little more complicated based on the assumptions that 2005 has already been closed out and all 2005 reports have been printed and 2005 tax returns have been done.

[will]

It is the first year Peachtree is being used.

The sale (invoice) was made the previous year, however the customer did not technically pay until 2006. So the sale was never realized in 2005.

I appreciate the help.

Will

[Lorin Browning]

If the sale was not included in 2005 revenues, I would simply book the sale and the receipt of the funds in 2006.

Debit cash
Credit sales

[Lisa_p]

Then it's not accrual basis, it's cash basis.

How are you filing taxes? Cash or accrual? If it's cash, then you need to recreate your company file using cash basis. If you're accrual, you should have recognized the income in 2005.

[TheWolf]

You can actually do your taxes as cash and accounting as accrual. The easy way is to just subtract the total AR from the income line and the total AP from the expense line, before doing your taxes.

[Lorin Browning]

And remember to add back to the adjusted totals the accruals from the prior year. Those would be revenues and expenses recognized in the prior year but not received and not paid during the current year.

Adjustments are required at both ends of the accounting period if one is converting from accrual to cash for tax purposes.