Bank Reconciliation and Deferred Revenue

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DavmacMECO
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Joined: Wed Apr 29, 2020 9:15 am

Bank Reconciliation and Deferred Revenue

Post by DavmacMECO »

We have a tenant who wants to pay their rent in advance. My understanding is that I would debit Cash and credit Deferred Revenue. However on the Bank Reconciliation the Cash entry show up but the Deferred Revenue side of the entry does not. How do I reconcile the bank statement in this case?

NeilZ
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Re: Bank Reconciliation and Deferred Revenue

Post by NeilZ »

DavmacMECO wrote:
Tue Jan 05, 2021 10:47 am
We have a tenant who wants to pay their rent in advance. My understanding is that I would debit Cash and credit Deferred Revenue. However on the Bank Reconciliation the Cash entry show up but the Deferred Revenue side of the entry does not. How do I reconcile the bank statement in this case?
I'm assuming that the Deferred Revenue is listed as an Income Account, and the 'cash' is your checking account? The income entry will not show up on the bank statement, all that would show up is the deposit of the rental amount. I'm not sure why you expect to see the deferred revenue listed on the bank statement since the bank has no knowledge of your internal accounting.

That said, while the person is paying the rent in advance, the revenue is not 'deferred' as in a cash basis system, all incoming cash is current revenue. I would just list it as regular rental income. However, if you're really wanting to keep it as deferred until the beginning of the month (if they pay on the 15th for the next month starting on the 1st) put the income in a liability account, then create the transaction to move it to the income account on the 1st. In this manner, its kept separate just in case you have to return the payment for some reason.
Neil Zampella

Using PC+ since 1999.

DavmacMECO
Posts: 5
Joined: Wed Apr 29, 2020 9:15 am

Re: Bank Reconciliation and Deferred Revenue

Post by DavmacMECO »

Thanks Neil.

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