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Cash basis accounting and Apply Funds to AR

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Duy Thai Posted: Sun, Mar 18 2007 11:34 PM
I am cash basis.  I sent a bill to a client on 12/26/06.  The bill reflected a credit for the $2500 the client has deposited in the trust fund.  BM+ recorded this as an "Apply Funds to AR" on 12/26/06.

I did not actually transfer the $2500 from the client trust fund to my business account until 1/10/07 because I want to give clients at least 10 days after they receive my bill.  BM+ records this as a "Bank Deposit" on 1/10/07. 

The $2500 shows up on  my income statement for 2006.  Is this correct on cash basis?  If not, how do I adjust this in BM+?  Thank you for your input.
Duy Thai San Francisco TM/BM+
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I am not really sure if you are asking a question and if so what question. 

In your scenario, you have paid yoursefl $2500 from your trust account. That is the apply funds to AR. It is a payment on the invoice. It is income as you paid yourself on that date. The bank deposit just moves the money from undeposited account to the proper bank account.

If you do not want to pay that invoice until January then you should not have applied the money in funds to the invoice.

What is the scenario that you want? If you want the income in Jan 2007, then undo the bill, uncheck apply funds to AR on the billing preferences of the matter and create the bill with a date of 12/26/2006. On January 10, 2007 withdraw from funds AND enter a payment in the amount of $2500. Deposit the money into your bank.  If you are comfortable with Journal Entries, you could enter one and make any adjustments you want.

We are not here to give you accounting advice, just help you make the entries that you intend.

Matt

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Duy Thai replied on Tue, Mar 20 2007 8:17 AM
Matt,

To clarify, what I wanted was to send an invoice reflecting a bottom-line Balance Due that subtracted the amount in the trust account.  The only way I could find to do that was to "Apply Funds to AR."  However, I did not intend to "pay myself" from the trust account on that day (nor am I sure I was allowed to).  If you know of a way for me to send such an invoice without being forced to recognize revenues before I actually "paid myself," I'd appreciate the suggestion.

Duy Thai San Francisco TM/BM+
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In order to accomplish what you want you will either have to post date the invoice or do a manual withdrawal from funds and a payment to the invoice with the appropriate date.
When you have funds in trust and you move them out to pay the bill they are income as of that date. If the invoice date is not good for the transfer then you must do it manually. This is probably more correct since you are not actually taking the money out until a later date and your bill should reflect that.


 

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Duy,
This is a long shot but have you experimented with the bill layout called Bill layout arial 8?  It shows the fund related transactions at the bottom of the invoice.  If you don't transfer the funds to A/R and then use this layout you still won't have the true balance due but at least they will see the amount in the trust and can do their own subtraction.  You could even add a message indicating that the amount in trust can be applied towards the outstanding balance.  Just a thought.

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