Need help recording customer prepayments CORRECTLY

I have a challenge on how to record customer prepayments CORRECTLY. I have followed and read some old links, but most seem to be broken or not existing.

This is how I recorded pre-payments:
Customer A pays 100 cedis for future delivery of my items.

  1. I receive the cash amount into a liability account I created called “prepayments”.
  2. Upon delivery of the item, I spend the cash amount from the “prepayments” liability account.

This type of recording is affecting my cash at hand balance in the wrong way as it reduces the cash at hand with the prepaid amount when I am spending from the “prepayment” liability account.

I need help, what am I doing wrong and how to correct it.

Thank You

you have Two option

  1. if you receive the cash into liability account then you need to make Journal Voucher after delivery. to reclass the payment from liability to customer account.

  2. instead of receiving the cash into liability you cad put into customer account and it will appear as negative once you make the invoice it will show you the due balance

Read this Guide Manager Cloud

Thannks the info there was helpful. However, I know there is another approach where you can create a liability account eg “prepayments” and use it to record all prepaid monies from customers. How can that be done too? Thanks in advance.

Do the prepaid monies from the customer as you have noted using the “prepayments” account.
When you create the Sales Invoice, add a line and for Account select the “prepayments” ( Down Payments) account and enter your description and the required amount as a negative (-50.00).

Use special accounts. See Manager Cloud.

Thanks guys @Tut @Brucanna @abdulbari