I am doing the books for a small company operating two festivals a year.
In the last accounting year (ending 30 Sep 2019) I started accounting for ticket sales differently than before, i.e. I accumulate in an “unearned revenue” account (a liability account) until after the event, and then move them in one big batch to the actual income account.
Since the event took place in this accounting year, a certain amount of unearned revenue appeared in last year’s balance sheet as a liability, as it should.
In the meantime, I closed the books for the last accounting year (all bookkeeping done, tax declared and tax bill received, and tax for the year added), which now leaves me in a head scratching situation for how to move the correct amount of income from unearned revenue to income.
Last year: Unearned revenue: £2,000
This year: Unearned revenue: £8,000
Therefore, the total festival income is (should be) £10,000.
But how do I show this in the books? As one £10,000 journal, or as two journals, one for last year, and one for this year?
Thanks in advance,