How do I account for Membership fees or subscriptions due this Financial Year which were received in the previous year? (Prepayments)
You should account for this as a revenue prepayment. For instance, assuming your new financial year starts 1st April and you received April's membership fees in March, you would create a revenue prepayment transaction to record the cash receipt [into your bank account] in March and create a prepayment liability on your balance sheet. Then, in April, you will clear the prepayment liability balance and report the income on your P&L report.
| Date | Receipt/Payment Cost Code | Account | Amt | |
|---|---|---|---|---|
| Step 1: | 12th March (one or more receipts) | Receipt – Membership Income | Bank A/c | £250 |
| Step 2: | 31st March | Receipt – Membership Income | Creditor A/c | -£250 |
| Step 3: | 1st April | Receipt – Membership Income | Creditor A/c | £250 |
Step 1: These are the membership payment transactions that you received early during March (or before). These will be created by your normal membership receipt process if you are using the Membership system.
Step 2: Manually enter a single Receipt prepayment for the prepayment liability. You should use the same Cost Code used in Step 1 and it should be recorded against your Creditor A/c. Importantly, enter this as the total negative value of Step 1.
This creates the liability balance for the prepayment and cancels out the Membership Income in your March P&L.
Step 3: In April, open and Reverse the prepayment receipt transaction created in Step 2. (use Reverse button)
This will cancel out your liability balance and create the Membership income in your April P&L
Have a look at our Help page for more details: https://clubtreasurer.com/blog/?page_id=871#RP