About Entries for Prepaid Deposit Transactions

Assume for this example that a Prepaid Liability account is configured as the AR account in the prepaid deposit product. This following example shows the resulting GL Entries from a transaction that does the following:

1. A Prepaid Deposit is taken for $100.
2. A $100 purchase is made.
3. A $100 payment is made using the Credit Memo established from the order of the prepaid deposit product.

Prepaid Deposit Zero-Balance Order

Since the price of the order is zero, there is no GL activity from the order. When a payment is made on this zero-balance order, it creates a credit memo against the zero-balanced order. The following tables represent the payment GL entries.

Account	Debit	Credit
Cash	$100.00
Prepaid Liability		$100.00

GL entries generated for an Order that will use the prepaid deposit credit memo:

Account	Debit	Credit
A/R	$100.00
Sales		$100.00

GL entries generated for Payment with the credit memo:

Account	Debit	Credit
Prepaid Liability	$100.00
A/R		$100.00

After this sequence of transactions, you can see that the entries to Prepaid Liability cancel and the entries to AR cancel. The result:

Account	Debit	Credit
Cash	$100.00
Sales		$100.00

Related Topics

Understanding Order Entry

Administering Order Entry

Entering and Fulfilling Standing Orders

Processing Payments