Journal entries for retainers

Discussion in 'Accounting' started by lohad, Dec 9, 2013.

  1. lohad

    lohad Guest

    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.

    lohad, Dec 9, 2013
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  2. 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.
    paulthomascpa, Dec 10, 2013
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