how do you handle pre-paid pledges?

by Connie N
(Fort Worth TX)

Each spring we have a pledge drive, asking members to commit to a specific amount they plan to give in the next fiscal year (July - June). Some like to pay part or all of this amount before the beginning of the fiscal year. How do we record this so the payment does not count as income when it is paid, but is set aside to count as income later, when the new fiscal year begins?

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Further Question
by: Anonymous

I found this post on QBO Community,

To start with, create a liability account to track the amount of the retainer you received from your customer. Let me walk you through the steps:



Go to the Gear icon at the top.
Under Your Company, choose Chart of Accounts.
Select New.
In the Account Type drop-down, choose Other Current Liabilities.
In the Detail Type drop-down, select Trust Accounts - Liabilities.
Enter the account’s name or leave the account name as is.
Click on Save and Close.
Then, create a retainer item you can use to receive the deposit or retainer from your customer. For the detailed instructions, refer to the steps below:

Go to the Gear icon at the top.
Under lists, choose Products and Services.
Then select New.
On the Product/Service information window, select Service.
Enter a name for the product or service item.
From the Income Account drop-down, choose Trust Liability Account.
Click on Save and Close.
If you'll be keeping the money from your customer's retainer or deposit in a separate trust account, you’ll need to set up a trust liability bank account in QBO. For the step-by-step process, click on this link and going directly to the create a trust liability bank account section.

So here is my question:
Are these the same steps I would use, just replace "Retainer" with "Pledges"?

Why would it be a bigger problem to use a calendar year?
by: Anonymous

Also, do I need to allocate a large tithe paid in advance over 12 months or can I just dump it all in January?
Pre-paid Pledges
by: MarcusNTexas

This could get a little bit complicated. You would need to set up a "liability / credit" account perhaps entitled "Pre-paid Pledges" and when the money is received, debit the bank account to record the deposit and credit the "Pre-paid Pledges" account. Then, when you get to the new fiscal year, you would need to debit "Pre-paid Pledges" and credit your "Regular Tithes and Offerings" income account for the full amount that is "sitting" in the "pre-paid pledges" account on July 1st. It would be a bigger problem if your fiscal year was January / December, but you should not have a reconciliation problem between the members giving record and the accounting records with your July/June fiscal year.

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