Invoice for this year and a part for next year

Hello,

IM the bookkeeper of a small volunteer organisation.
Now I have the following situation.

A client buys a subscription for lets say 22.00 euro.
But 11 euro should be on the profit loss of this year and 11 euro schould be on a I think balance account where the amount is stored so on 1 January I can make a journal post to set in on the profilt loss of next year.

How do I manage this with a invoice which is payed in full .

Roelof

I don’t understand what you are asking. I can only guess the subscription is for 2 years and 11 € is for this year and the other 11 € is a prepayment for next year.

What journal entry did you use to make for this situation until now? Anyway, isn’t your question a basic accounting question and not one related to the Manager accounting software, which is the scope of this forum?

I know but what my real question is how can I make the invoice so it getting handled the right way.
Can I use a balance account in a invoice ?

You still haven’t explained what the 22 € is for. Normally you create the customer and invoice him/her. Then enter the payment in Receipt & Payments for the corresponding invoice.

Your situation is not clear. Are you keeping the books of this client as an accountant or bookkeeper? Or is the client your customer, buying a subscription for something from your organization?

My answers assume the client is a customer of your organization and is buying the subscription from you.

If you are using accrual basis accounting, you first need to consider the terms of the subscription. If the customer has, for example, purchased a one-year, non-cancellable magazine subscription and is owed delivery of all issues as they come out, you might consider the full amount as having been earned when invoiced. You would not split the income by year in that case. But if they have subscribed to some service that can be cancelled, and for which you would be liable to refund the undelivered portion, the sales invoice needs to be split into two line items, one posted to a current income account and the other to a liability account for prepaid items. During the future accounting period, use a journal entry to transfer the appropriate amount from the prepaid liability account to the income account. The receipt from the customer in payment of your sales invoice does not enter the picture. There could be situations in between, as well.

If you are using cash basis accounting, the concept of splitting income recognition into different accounting periods does not apply. So there is no need for multiple line items on the sales invoice and no journal entry, regardless of the subscription terms. The income is earned when received.

oke, are you sure. I always learned that income must be put into the year that is it meant.
So when a customer buys a subscription of 22.00 where 11 euro is the payment for a subscription this year and 11 euro is meant for paying the subscription next year I have to split it

You should enter a journal entry to postpone half of the profit to next year.

You make a writing at 31/12 and the specular one at 1/1:

  1. At 31/12 you register a liability Vs a decrement of the income
  2. At 1/1 you clear the liability Vs the income.

oke, but because it can be different amounts, is it then not better to split at he invoice.
So still the question can I use for example Vooruitbetaalde contributie which is a balance acccount in the invoice and then on 1/1 make a journal entry to clear “Vooruitbetaalde contributie” and set the “Contributie” which is a profit/loss account to that amount

Obviously half or the amount you need to postpone.

It depends on the local law. In Italy you should calculate the amount that refer to each period indipendently both if it is cancelable or not

You can also split the Sales Invoice into two lines.

One Vs profit P&L for “current year fee” and the other Vs a Liability for Anticipation for “next year fee”.

Than next year you will have to do a Journal Entry to clear the liability Vs a profit in P&L “for current year fee”.

This will bring the same result with only two writings and a more readable document.

Thanks, I use now wave apps where I have to do a lot of wierd things to make this work.
I love it that Wave apps is in the cloud and free but it has also some things that annoy me a lot

There is more to the decision on when to recognize income than time. The biggest is the difference between accrual and cash basis accounting: when is income earned versus when is money received. But there are secondary factors, too. These can affect the determination of whether the money has yet been earned. That is what I tried to illustrate with my magazine example.

Absolutely true. It also depends on what accounting standards and methods are required for your jurisdiction, business size, and industry.

It is best not to compare Manager with other software. Resolve the accounting questions first. Manager will handle whatever approach you take. But you need to know what you want to accomplish.

@Roelof_Wobben I don’t know if VAT (BTW) is involved. More info you can find here:
https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/bijzondere_regelingen/stichtingen_en_verenigingen/
and/or
https://www.verenigingen.nl/173/btw-afdragen-ja-of-nee.htm#

With the knowledge I have now I would make two P/L accounts named (for instance):
Contributions this (financial) year
Contributions next (financial) year

When making an invoice you can split the contribution into two rules with according accounts, so the resulting journal entry would be, if VAT (BTW) is not involved:
Debtors 22,-
a/ Contribution this year 11,-
a/ Contribution next year 11,-
This way you can split the amounts accordingly to the periods left when making an invoice.

At the closing of the financial year:
Contribution next year 1100,- (imaginary total amount account [Contribution next year])
a/ Deferred amounts (in Dutch [Vooruitontvangen bedragen]) 1100,- (imaginary total amount account [Contribution next year])

When opening the financial year:
Deferred amounts 1100,-
a/ Contribution this year 1100,-

Maybe @Henny, Dutch contributor to this forum with knowledge of Dutch tax rules can give his opinion regarding this topic.

Having a Non inventory Item with units of months for each year may also achieve what you need eg

  • Month subscription 2019
  • Month subscription 2020
  • Month subscription 2021

The simplest way is to have a pro rata subscription for the first year and then have full subscription for the following years, this way all full year subscriptions are for the same period so no need to proportion over any financial year end.

So the full year subscription is 22 euro and the subscription year is Jan 1 to Dec 31.
So if a member joins in Jan to Mar then they pay the full 22 and it expires on Dec 31.
If the member joins in Apr to Jun then they pay 16.50 and it expires on Dec 31.
If the member joins in Jul to Sep then they pay 11 plus 22 until the next Dec
If the member joins in Oct to Dec then they pay 5.5 plus 22 until the next Dec.

Those “22 next Dec” subscriptions could be posted to a BS account and be transferred on Jan 1.

The committee of the Volunteer organisation can create their own pro rata schedule.
Adopting the type of approach removes a lot of un-necessary accounting argy-bargy.

Alternatively, adopt @ries approach in post #14, but this still creates a lot of duplication accounting.