Tut,
I have gone through all the previous topic on billable expense.
My challenge is clearing the transaction amounts from billable expense -cost to their proper expense heads.
For instance I paid cash of $200 for a service (cleaning) for a customer, which the sales invoice is yet to be raised.
The two accounts affected were cash account and billable expense - asset.
When the Sales invoice is raised, and Sales invoice No. is entered, the cost of the service ($200) was transferred from Billable expense -asset to billable expense -cost.
On the chart of account, the service (cleaning) ought to hit Sanitation expense, but it is sitting at billable expense -cost.
Is the use of Journal entry to move the cost from billable expense -cost to Sanitation expense correct?
If you paid for the cleaning services and then billed it to your customer, it is not an expense for your business so it can not appear in your P & L as an expense
@Joe91 is right. Billable expenses - cost is really a contra income account. It is present to offset the revenue in Billable expenses - invoiced, so their net effect on profit is zero (unless you edit expenses to mark them up for additional profit or mark them down as discounts). Depending on how long you have used Manager, you may remember when these “pass-through” expenses did not show on the profit and loss statement at all. But that caused problems for some users, who had difficult explaining why they were not reporting all their revenue as taxable income, even though it would have been offset by deductible expenses at the same time.
@cmnak, your Sanitation expenses account should record only (1) sanitation expenses you spend on your own business, such as cleaning your own office, or (2) operating costs you cannot pass through to the customer. An example of the latter would be if you contracted with the customer for overall maintenance services at a fixed price and did not bill separately for the cleaning services. In that case, you would not record the cleaning services as a billable expense in the first place. The second situation would be no different from an accounting perspective than sending your own employees to clean the customer’s office, except you are paying an outside vendor instead of employees.