I use Manager.io as treasurer of a large club. I could use some advice on how to handle receipts taken in for an unrelated sister club (we give a net price discount if you join both clubs). The received amount is split when I record it. I currently allocate the sister club’s portion to it’s own income account and then every few months I write a check to them against this account which zeros it out.
The problem is that whenever there is a balance in this account it shows up in our balance sheet when I am simply “holding” this money for them temporarily.
Is there a clean way to receive this money while keeping it off our club’s balance sheet? My first thought was to use a liability account but I don’t know how to do this. How can I enter their portion when received and simultaneously enter the liability so it effectively zeros it out on our balance sheet? Thank you.
The part received on behalf on another business is a liability and it must always remain as a liability.
Create a liability account and place it under Liabilities group in the balance sheet. When you receive it, using the Receipt module
Debit: Cash/Bank
Credit: the Liability account.
You have to split it using two-line items. so, you will have something like this
Debit Cash/Bank 1000
Credit Subscription Income 500 (income Account or Account receivable account if an invoice was issued to the subscriber/Customer first) Credit Funds received on behalf of Club A 500 (Liability Account)
Account Zeroes out only after making payment.
Do you remit the funds to the related business immediately? We can try another move.
Thank you for your reply. Very helpful and I can follow along fine.
I do understand generally what you are suggesting. I did create a liability account for tracking the money owed. Then, in the receipt form, I can receive the money in our checking account, but lower down in the credit section, for the account pull-down I am only seeing my expenses and income accounts to choose from. The liability account I created isn’t one of the options.
Is there a step I’ve missed to make the liability account show up as one of the account pull-down options?
To answer your question… I don’t remit the funds immediately. This would be a nuisance given the small amounts. Usually I send a check over every month or so.
Upon further searching, I did find this (below) in the manager help files. I am not sure if it directly applies to my situation, but it seems related. Note: We don’t have any “customers” set up, so therefore we don’t have Accounts Receivable set up.
In Manager.io, you cannot apply a receipt directly to a liability account. Instead, the process for handling customer deposits and advances is structured differently.
Recording Customer Deposits and Advances
When you receive funds from a customer before they are earned, these amounts are treated as liabilities. Here’s how to manage them:
Account Type: Record the deposit under Accounts receivable.
Receipt Process:
Go to the Receipts tab.
Click on New Receipt.
Under Paid by, select the customer.
Leave the Item field blank.
Select Accounts receivable in the Account field.
Enter the total deposit amount in the Unit price field.
Impact on Financial Records
The deposit increases your bank or cash account balance.
It also reduces the total balance in Accounts receivable, reflecting the liability owed to the customer.
Summary
To summarize, while you cannot apply a receipt directly to a liability account, you can effectively manage customer deposits by recording them as liabilities under Accounts receivable. This ensures accurate tracking of funds received and obligations to customers.