Journal entries for retainers


L

lohad

I need to bill a client for a retainer of 50,000. Additionally, we owe them
rent of 5,000. What are the journal entries to record the issuing of the
invoice and what are the journal entries to record the payment of the invoice
(they are only going to be paying me $45,000). I am billing them at the
beginning of the month, they are going to pay at the end of the month.

thank you.

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P

paulthomascpa

lohad said:
I need to bill a client for a retainer of 50,000. Additionally, we owe
them
rent of 5,000. What are the journal entries to record the issuing of the
invoice and what are the journal entries to record the payment of the
invoice
(they are only going to be paying me $45,000). I am billing them at the
beginning of the month, they are going to pay at the end of the month.



Sounds like a Credit of the retainer amount to either to a liability or to
income account depending on if it's considered "earned" at that moment. The
corresponding debit is to a receivables account.

Then Debit rent expense and credit the payables account for that amount.

When the money comes in, Credit the receivables account for the full amount
and Debit the payables amount for that full amount, with the remaining
amount booked to the bank.
 

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