Sales & Deposits

OK, now you've entered your accounts payable, your expenses, your payroll. Now for the good stuff - let's enter your sales. Remember: sales accounts are credit accounts. So when you want to increase the amount of sales. You have made, you make the entry as a credit entry. These entries are pretty easy, on the surface: you receive a check and put it in your account: debit cash. The sale, if it is an item you have on hand and give to the buyer, you enter as an immediate sale. Credit sales, the equal amount that you debited cash.

HOWEVER, if you have just signed a contract, and have not actually done any work on that project this month, you have not yet earned that sale. You're just holding the person's money for them, keeping it safe. Right? So, it is not yet truly a sale - it's a customer deposit. The entry will be debit to cash (it's in the bank, either way) and credit customer deposit, which is a liability account (you would have to refund the money if you don't do the job). If you have a lot of jobs going at any one time, you'll make your job easier if you give each job its own number in customer deposits, so you can easily keep track of how much has been turned into sales, and how much remains to be earned.

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This page last modified: 11 Mar 2008