Hi,
For some years I/we have been using QF for a club based on a cash accounting system. By that I mean that we may receive a bill/invoice and that is paid more or less immediately with no recourse to upload of supplier or customer invoices or use of creditors/debtors lists.
I am setting up a new system for another organisation which again operates on the same principle.
Previously the following may have occurred:
Q: We have paid a deposit for a venue or an amount in full as fees (such as Insurance) for events take place in the next accounting period. During that following year the balance of the amount due will be paid or the fees etc are apportioned over a number of activities based on the take-up for that year. We may not know how this pans out until well into the next accounting period.
What is the step by step (idiots guide):
To marrying up the original deposit paid with the final balancing payment?
To splitting the out the original full payment across the event/activity accounts?
Rgds NDG1944
These are two very different meanings of the word “prepayment”, I’ll consider them separately.
How you handle this depends on whether you have been sent an invoice for the deposit or whether the whole amount will be invoiced in one go later on. If you’ve been separately invoiced for the deposit then no problem, you can just pay that invoice now and then pay the balance invoice later. If the supplier hasn’t invoiced you for the deposit then you would just tag “payment to a supplier” in the normal way, but select the “pay down multiple invoices or assign to supplier account” option. Enter the name of the supplier (creating one if necessary) and leave the whole payment unallocated.
When you get the invoice for the full amount, create a purchase for that full amount in QuickFile but leave it initially unpaid. Then “log payment” → “apply from credit” to assign the deposit prepayment to the unpaid purchase. The remaining unpaid balance on that purchase should match the final balancing payment that you made to the supplier, which you can again tag with “payment to a supplier” → “pay down multiple…”. Enter the supplier name again and you should see the part-paid invoice available to tag the balancing payment.
In this case the whole expense would show in P&L for the period including the date of the purchase record - the deposit you paid the previous year just forms part of the creditors control account total on the year end balance sheet.
For this one I would create a purchase and mark it paid in the normal way when you actually paid for the insurance (presumably during the earlier year), as per the date on whatever invoice the insurance company sent you at the time.
Once you’re far enough into the year to know how much of the insurance cost should be apportioned to each period, you’d create a journal on the last day of the period when you paid for the insurance, that does a credit to the P&L nominal matching the original purchase (probably “insurance”) and a debit to the “prepayments” nominal on your balance sheet, for the amount that you want to move out of the purchase year. For example if you paid £300 for insurance in year A and determined that one third of that pertains to events in year A and two thirds to events in year A+1, then you’d journal £200 from credit insurance to debit prepayments.
Set that journal to reverse at the start of the following period. The overall effect is that £100 shows as insurance in your year A P&L, and £200 shows as “prepayments” on the year end balance sheet. For year A+1 that £200 moves back from the balance sheet to the P&L.
Unless the club is large, then I would say it’s best to use cash accounting, in which case you wouldn’t need to worry about apportioning the insurance costs to the correct period, you just recognise the expense when it’s paid.