(Vancouver, BC, Canada)
Hi,How to Record and Apply a Customer Deposit
We run a small B&B.
If I receive a payment in 2009 for a 2010 booking - do I report the payment as income in 2009 or 2010?
After all the guest could cancel ...
The short answer to your question is no ... customer deposits are not recorded as income ... until you have provided the service or product.
Thanks for asking this question ... because it is a very common bookkeeping error ... so good for you for catching it.
Customer deposits are unearned revenue ... which means they are a liability to you. Sales tax is also affected, because you don't have to pay sales tax until the service or product is delivered either.
I'm going to give you a link on how to handle this type of bookkeeping entry. Read through the whole post ... because you will have two choices ... so pick the method you are most comfortable with.
If there is anything you don't understand after you've read through the instructions, post back here and I'll help you out further.
Have a fabulous weekend Joerg! :0)