Topic Doc: Accrual Processing and Examples
RecTrac 3.1
Table of Contents
Document Summary
The Accrual Processing in RecTrac is used in a Receivables environment to move money from Unearned Income Accounts to Earned Revenue Accounts on a regular periodic basis, such as monthly.
In an Accrual basis of accounting, revenues are reported on the income statement when they are earned. Under a Cash basis of accounting, revenues are reported on the income statement when the cash is received. Under the Accrual basis of accounting, expenses are matched with the related revenues and/or are reported when the expense occurs, not when the cash is paid. The Accrual Processing program generates this expense and moves the money into the proper Revenue Accounts. The result of this process is an income statement that measures profitability during a specific time period, such as a calendar or fiscal month.
The RecTrac application allows you to control transactions that are involved in the Accrual process. The minimum assumptions are that your department:
- Is running as a Receivables-based environment and that the G/L Post Option field on your Static Parameters profile is set to Receivables (Required for Accrual).
- Has the Use Accrual option selected for all applicable Fees. This option is located on the Fee Update • Additional GL Settings group.
- Has a valid Receivables GL Code in the appropriate field, located further down in the Financial Settings group of the Static Parameters profile.
You can set up multiple Unearned Revenue and Receivables Accounts, if desired. These are linked on your Fees. This document outlines the steps you need to take to setup RecTrac up to use Accrual Processing. It also provides Accrual Processing examples by module.
Note: If you are currently running RecTrac in a Cash-based environment and want to use Accrual, Vermont Systems strongly recommends reading Converting from Cash-based Accounting to Receivables-based or Receivables/Accrual-based Accounting.
Cash-Based Accounting vs. Receivables-Based Accounting vs. Receivables/Accrual-Based Accounting
The RecTrac application provides three (3) accounting solutions: Cash-based accounting, Receivables accounting, and Receivables/Accrual accounting. In very general terms, the difference between a Cash-based accounting system, a Receivables-based accounting system, and a Receivables/Accrual-based accounting system is in how revenues are earned reported on income statements. The following provides a simple example of each accounting system.
Cash-Based
In a Cash-based accounting system, revenues are earned and reported on income statements at the moment the cash is received.
For Example: You have a CPR Certification activity on 09 April. Registration Fees are $50.00. Clara Barton and Florence Nightingale sign up for the program on 26 March. Clara pays the Registration Fee when signing up. Florence does not. $50 of revenue for the CPR activity is earned on 26 March and your deposit for that day includes Clara's $50.00. Florence Nightingale does not pay the Registration Fee until 20 April, two weeks after the fact. $50 of revenue for the CPR activity is earned on 20 April and your deposit for that day includes Florence's $50.00.
Receivables-Based
In a Receivables-based accounting system, revenues are earned and reported on income statements at the moment of purchase regardless of whether a payment is made. At the moment of purchase, your Receivables account is debited the amount of the purchase and your Earned Income account is credited. When patrons remit for the purchase, the Receivables account is credited by the amount of the payment.
For Example: You have a CPR Certification activity on 09 April. Registration Fees are $50.00. Clara Barton and Florence Nightingale sign up for the program on 26 March. Clara pays the Registration Fee when signing up. Florence does not. $100 of revenue for the CPR activity is earned on 26 March because that is the purchase date. Receivables is debited $100.00 and Earned Income is credited $100.00. Receivables is credited $50.00 for Clara's payment (for a net $50.00- to Receivables for the two enrollments) and your deposit for that day includes Clara's $50.00. Florence Nightingale does not pay the Registration Fee until 20 April, two weeks after the fact. $0.00 of revenue for the CPR activity is earned on 20 April (Revenue for Florence's enrollment was realized on 26 March when she registered) but your Receivables account is credited $50.00 (for a net $0.00 to Receivables for the two enrollments) and your deposit for that day includes Florence's $50.00.
Receivables/Accrual-Based
In an Accrual-based accounting system, revenues are unearned from the time of purchase until the service is provided. Once the service is provided, you process Accrual and money moves from Unearned Revenue to Earned Revenue in increments equal to the time over which the service is provided. At the moment of purchase, your Receivables account is debited the amount of the purchase and your Unearned Income account is credited. When patrons remit for the purchase, the Receivables account is credited by the amount of the payment. When Accrual is processed, money moves from Unearned Income to Earned Income provided Accrual is run on or after the date of the service being purchased.
For Example: You have a CPR Certification activity on 09 April. Registration Fees are $50.00. Clara Barton and Florence Nightingale sign up for the program on 26 March. Clara pays the Registration Fee when signing up. Florence does not. $100 of revenue for the CPR activity goes to your Unearned Income account on 26 March because that is the purchase date. Receivables is debited $100.00 and Unearned Income is credited $100.00. Receivables is credited $50.00 for Clara's payment (for a net $50.00- to Receivables for both enrollments) and your deposit for that day includes Clara's $50.00. On 01 April you process Accrual for the period 01-31 March. $0.00 for the CPR program moves from Unearned to Earned because the service has not been provided. The class is held on 09 April. Florence Nightingale does not pay the Registration Fee until 20 April, two weeks after the fact. Your Receivables account is credited $50.00 (for a net $0.00 to Receivables for the two enrollments) and your deposit for 20 April includes Florence's $50.00. No other money moves. On 01 May you process Accrual for the period 01-30 April. $100 moves from Unearned Income to Earned Income and revenue for the CPR class that took place on 09 April, which is included in your Accrual Date Range, is realized.
License – Maintenance Agreement
The Accrual Interface is free. Use of the interface requires a Vermont Systems license and annual maintenance agreement for RecTrac and the component modules discussed in this document. Prior to implementing any process outlined in this document, please contact the Vermont Systems Sales department at 1-877-883-8757 to verify that you are authorized to use the modules discussed in this document and if not, to obtain a quote and/or approval.
Document Scope
This document provides:
- Basic guidance and instruction for ensuring your system is set up as a Receivables environment and that Fees are set appropriately for Accrual.
- Basic guidance and instruction for ensuring Receivables and Unearned Income Accounts are linked in your system.
- An outline of how Accrual is determined by Module.
- Basic steps for running the Accrual Processing program.
- Accrual Processing examples.
- An overview of existing Accrual and Receivables Reports.
This document will NOT provide the steps required to:
- Create GL Accounts and Cost Centers in RecTrac
- Set up Fees and Tax Tables
- Implement and run an Accrual Processing plan for your Department.
If you have additional questions about Accrual Processing setup and operation after reading this document, please contact Vermont Systems Customer Service by phone at 887-883-8757 or generate a Support Case through the Customer portal of the Vermont Systems web site using your Customer ID and password.
Note: If you are currently running RecTrac in a Cash-based environment and want to use Accrual, Vermont Systems strongly recommends reading Converting from Cash-based Accounting to Receivables-based or Receivables/Accrual-based Accounting.
Before You Proceed
This document is written with the following assumptions. If any of the items listed below is NOT true, contact Vermont Systems Support prior to continuing, as the steps in this document may prove difficult to complete and unexpected results may occur.
- Your organization is running RecTrac 3.1.04.01 or greater.
- The User ID with which you sign into RecTrac has the requisite permissions and ability to access all modules and functions pertaining to Accrual Processing, to include but not limited to: the program itself, Profile Management, Fee Management, System Code Management and the Document Center.
- You understand RecTrac DataGrids and how to maneuver through them.
- You understand how to create GL Accounts, Cost Centers (as applicable) and Fees in RecTrac and how to link them appropriately.
- You understand the accounting principles used by your Department.
File Maintenance Setup
Note: Any file paths and screen/tab locations in this document refer to file paths and screen/tab locations as they appear in the standard, default Vermont Systems design. Your setup and Design may vary.
The RecTrac application allows you to control transactions that are involved in the Accrual process. The minimum assumptions are that your department:
- Is running as a Receivables-based environment and that the G/L Post Option field on your Static Parameters profile is set to Receivables (Required for Accrual).
- Has the Use Accrual option selected for all applicable Fees. This option is located on the Fee Update • Additional GL Settings group.
- Has a valid Receivables GL Code in the appropriate field, located further down in the Financial Settings group of the Static Parameters profile.
You can set up multiple Unearned Revenue and Receivables Accounts, if desired. These are linked on your Fees. This document outlines the steps you need to take to setup RecTrac up to use Accrual Processing. It also provides Accrual Processing examples by module.
Set Your System to a Receivables Environment
In order to process Accrual, your RecTrac system must be set up as a Receivables environment. The determination between a Receivables-based environment and a Cash-based environment is made on your Static Parameters profile.
- In RecTrac, search for and go to Profile Assignments.
- Click Static Parameters at the bottom of the screen.
- Expand the Financial Settings group.
- Ensure the G/L Post Option is set to Receivables (Required for Accrual). Make changes if necessary.
Note: If you are currently running RecTrac in a Cash-based environment and want to use Accrual, Vermont Systems strongly recommends reading Converting from Cash-based Accounting to Receivables-based or Receivables/Accrual-based Accounting.
- Continue to the next section below.
Determine Your Accrual Process Option by Module
RecTrac offers you the option to run Accrual Through Item Dates, where funds for an Item are moved from Unearned Income to Revenue on percentage basis each time Accrual is processed over the life of an Item or by Item Begin Date, where 100% of the funds for an item are moved from Unearned Income to Revenue the first time Accrual is processed after the Item Begin Date passes. These settings are maintained, by Module, in the Accrual Settings group of the Static Parameters profile.
- For each Module, determine how you wish Accrual to be processed:
- Through Item Dates - When you process Accrual, funds for items in this Module will move from Unearned Income to Revenue in increments over the length of the item, where a percentage is accrued each time Accrual is run. For Example: Your Activity runs from 15 May through 15 July. When you process Accrual, funds for this Activity will move from Unearned Income to Revenue in an incremental process, where <x>% is Accrued in May, <x>% is Accrued in June, and <x>% is Accrued in July. This is the standard, default method for accruing items.
- Item Begin Date - When you process Accrual, 100% of the funds for items in this Module will move from Unearned Income to Revenue the first time Accrual is run after the beginning of the Item. For Example: Your Activity runs from 15 May through 15 July. When you process Accrual for May, 100% of the funds for this Activity will move from Unearned Income to Revenue because the Activity Start Date has passed. When you run Accrual in June and July, no further funds for this Activity will be accrued (unless full payment for the Activity was not made in May).
- This is a Module-by-Module choice, meaning you can mix and match how Accrual is processed over your different Modules, if desired.
- Determine your Accrual General Ledger Posting Option. Vermont Systems recommends "Summary."
- Click Save and exit back to the main RecTrac menu.
Notes: All Examples in this Document use the standard, default Through Item Dates setting in these fields.
The Rental Accrual Option can be overridden using fields on the Accrual Processing program • Rental Options group.
Set Fees to Use Accrual
Fees subject to Accrual must be specified in RecTrac. This can be done a per Fee basis or in can done in Bulk.
- In RecTrac, go to a Fee linked to an item for which you will run Accrual.
- Highlight/select the Fee and click Change. You will continue to the Fee Update screen.
- Expand the Additional GL Settings group.
- Select the option to Use Accrual?.
- Enter a Receivable GL Code and Cost Center, if desired.
- Click Save. Changes take effect immediately.
- Repeat these steps for all applicable Fees that are linked to items for which Accrual will be processed.
Note: You can set the Use Accrual field value in bulk. To do this, use the Bulk Change program in Fee Management. Access the program and Add UseAccrual to the Bulk Changes to Add box. Set the Field Value to Yes. Process your bulk changes as you normally would.
Use the "i" Information icon for field definitions, if needed.
Click Image to Enlarge
Receivables and Unearned Income Account Information
RecTrac provides three (3) places for linking Receivables Accounts and two (2) places for linking Unearned Accounts. Before beginning the setup process, it is important to understand how the receivables accounts can be used and their hierarchy in the process.
Receivables Accounts
When processing in a Receivables or an Accrual/Receivables environment, purchases result in a Debit to the Receivables Account linked to the item equal to the amount of the purchase. Payments made toward purchases result in a Credit to the Receivables Account linked to the item equal to the amount of the payment. It is therefore necessary to have at least one (1) Receivables Account in your RecTrac system, though you can create multiple Accounts, if desired.
Receivables Accounts may be linked in three (3) separate places in RecTrac:
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Fees - A Receivables Account can be linked directly to a Fee. Fields on the Additional GL Settings group in Fee Update allow you to link a Receivables GL Account and Receivables Cost Center (if applicable) to each Fee.
The Receivables GL Account and Cost Center linked to a Fee takes precedence and always will be used when that Fee is charged. If desired, you could create and link a separate Receivables GL Account and Cost Center for each Fee you charge, though such a set up would be unlikely. - Tax Table Update - Tax Table System Codes provide fields for Receivable GL Code and Receivable Cost Center for each tax percentage break out. If your organization charges sales tax AND you are using Receivables or Receivables/Accrual, you MUST link a Receivables Account to EVERY sales tax percentage in Tax Tables Update.
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Static Parameters Profile • Financial Settings Group - When running in a Receivables environment, a Receivables Account must be linked to your Static Parameters profile; a Receivables Cost Center is optional.
The Receivables GL Account and Cost Center linked to your Static Parameters profile will be used as a "catch all" in the event you have not linked a Receivables GL Account to your Fees. The GL Account you link can be the same GL Account linked to your Fees (this would ensure redundancy) or it can be a different, more general Account, if desired.
Unearned Income Accounts
When processing in an Accrual/Receivables environment, purchases result a Credit to the Unearned Income Account linked to the item purchased equal to the amount of the purchase. The process of running Accrual results in a Debit from the Unearned Revenue Account and a corresponding Credit to the Revenue account equal to a percentage increment of the time over which the service is provided. It is therefore necessary to have at least one (1) Unearned Income Account in your RecTrac system, though you can create multiple Accounts, if desired.
Unearned Income Accounts may be linked in two (2) separate places in RecTrac:
-
Fees - An Unearned Income Account can be linked directly to a Fee. Fields on the Additional GL Settings group in Fee Update allow you to link an Unearned Income GL Account and Cost Center (if applicable) to each Fee.
The Unearned Income GL Account and Cost Center linked to a Fee takes precedence and always will be used when that Fee is charged. If desired, you could create and link a separate Unearned Income GL Account and Cost Center for each Fee you charge, though such a set up would be unlikely. -
Static Parameters Profile • Financial Settings Group - An Unearned Income Account can be linked directly to your Static Parameters profile; an Unearned Income Cost Center is optional.
The Unearned Income Account and Cost Center linked to your Static Parameters profile will be used as a "catch all" in the event you have not linked an Unearned Income Account to your Fees. The GL Account you link can be the same GL Account linked to your Fees (this would ensure redundancy) or it can be a different, more general Account, if desired.
Link Receivables and Unearned Accounts
Using the information provided above, determine how and where you wish to link your Receivables and Unearned Income Accounts. This section provides the steps to link Receivables and Unearned Accounts to your Static Parameters profile, to Fees, and to Tax Tables. The number of accounts you create and where you choose to link them is up to your department policy.
Remember: A Receivables Account MUST linked to your Static Parameters profile and you MUST have at least one (1) Unearned Income Account in your RecTrac system.
Link Accounts to Your Static Parameters Profile
- In RecTrac, return to Profile Assignments.
- Click the Static Parameters button.
- Expand the Financial Settings group.
- Ensure your G/L Post Option is set to Receivables (Required for Accrual) as discussed above.
- Expand Unearned GL Code and select the General Ledger Account Code you use to track Unearned Income at the System level.
- (Optional) Expand Unearned Cost Center and select the General Ledger Cost Center Code you use to track Unearned Income at the System level.
Note: Purchases made in your system will post as Credits to this GL Account and Cost Center (if used) selected here in the event an Unearned Income Account (and Cost Center, if desired) is NOT specified on the Fees being charged.
- Expand Receivables GL Code and select the General Ledger Account Code you use to track Receivables at the System level.
- (Optional) Expand Receivables Cost Center and select the General Ledger Cost Center Code you use to track Receivables at the System level.
Note: Purchases made in your system will post as Debits to this GL Account and Cost Center (if used) selected here in the event a Receivables Account (and Cost Center, if desired) is NOT specified on the Fees being charged.
- Click Save and exit back to the main RecTrac menu. Changes take effect immediately.
Link Accounts to Fees
Use the following steps if opting to specify Receivables and/or Unearned Account information on Fees.
- In RecTrac, go to a Fee linked to an item for which you will run Accrual.
- Highlight/select the Fee and click Advanced Fee Change. You will continue to the Fee Update screen.
- Expand the Additional GL Settings group.
- Ensure the Use Accrual? option is selected, as discussed above.
- Expand Unearned GL Code and select the General Ledger Account Code you use to track Unearned Income for this Fee.
- (Optional) Expand Unearned Cost Center and select the General Ledger Cost Center Code you use to track Unearned Income For this Fee.
Note: Purchases made against this Fee will post as Credits to this GL Account and Cost Center (if used). If nothing is selected here, then purchases made against this feel will post as Credits to the Unearned accounts specified on your Static Parameters profile.
- Expand Receivables GL Code and select the General Ledger Account Code you use to track Receivables for this Fee.
- (Optional) Expand Receivables Cost Center and select the General Ledger Cost Center Code you use to track Receivables for this Fee.
Note: Purchases made against this Fee will post as Debits to this GL Account and Cost Center (if used). If nothing is selected here, then purchases made against this feel will post as Debits to the Receivables accounts specified on your Static Parameters profile.
- Repeat these steps for all applicable Fees that are linked to items for which Accrual will be processed.
Note: To set the Unearned and Receivables account field values for multiple Fees in bulk (as opposed to doing it by individual Fee as outlined above), use the Bulk Change program in Fee Maintenance (System Management • Fee/Rule/Question Management Group • Fee Management). Access the program and Add, as needed, ReceivableCostCenter, RecievableGLCode, UnearnedCostCenter and/or UnearnedGLCode to the Bulk Changes to Add box. Set the Field Value for each account as needed. Process your bulk changes as you normally would.
Link a Receivables Account to a Tax Table
Tax Table System Codes provide fields for Receivable GL Code and Receivable Cost Center for each tax percentage break out. If your organization charges sales tax AND you are using Receivables or Receivables/Accrual, you MUST link a Receivables Account to EVERY sales tax percentage in Tax Tables Update. The following provides the required steps.
- In RecTrac, search for and go to System Code Management.
- Filter the DataGrid by Tax Table.
- Highlight/Select the Tax Table Code you use and click Change. You will continue to the System Code Update screen.
- Click the Tax Table tab.
- Highlight/select a Tax Table and click Change Tax Table.
- Expand Receivables GL Code and select the General Ledger Account Code you use as your Tax Liability Account.
- (Optional) Expand Receivables Cost Center and select the General Ledger Cost Center Code you use as your Tax Liability Account.
- Click Save. You will return to the previous screen.
- Repeat this process for every Tax Table linked to this System Code
OR
Click Save to return to the main System Code Management DataGrid. - Repeat these steps as necessary for other Tax Table System Codes.
Note: If your organization charges sales tax AND you are using Receivables or Receivables/Accrual, you MUST link a Receivables Account to EVERY sales tax percentage in Tax Tables Update.
How Accrual is Determined by Module
The following provides a brief explanation and example of how accrual is determined within each applicable module of RecTrac. Detailed examples appear below.
Notes: When doing accrual calculations, RecTrac rounds up to the nearest penny. For accrual records that span a length of time (activities, passes, lockers, rentals, and leagues), these rounding calculations can cause remainders to be “left over.” When the time period for an accrual record has finished, RecTrac will accrue whatever is left on the record so these potential “left over” remainders get accrued correctly.
All examples in this section assume your Accrual Option (Static Parameters profile) is set to Through Item Dates.
Activity Module
To determine accrual rate for enrollments, RecTrac divides the number of sessions/meeting dates within the accrual date range by the total number of sessions/meeting dates for the Activity Section and multiples the product by the total fees charged for the enrollment.
For Example: Writer's Workshop costs $100.00 and has 10 total sessions/meeting dates. When running accrual, if four (4) sessions/meeting dates fall within your accrual range, $40.00 will be accrued for each enrollment as the following formula shows:
Four (4) sessions in the accrual range divided by 10 total sessions = .4 times $100.00 total fees charged = $40.00 to accrue.
Facility Module
Accrual is determined on the date of the reservation. It is NOT determined by the date on which the reservation was made, unless both dates are the same.
For Example: The Potter Park Pavilion rents for $100/day. On 15 June, Penny Lane reserves the pavilion for 15 August. When accrual is processed and 15 June is included in the accrual date range, $0.00 will be accrued for Penny's reservation. When accrual is processed and 15 August is included in the accrual date range, $100.00 will be accrued for Penny's reservation because the reservation date is included in the accrual run.
Pass Module
Standard passes and Punch passes are accrued differently.
Normal Passes
Accrual for standard membership passes is determined by dividing the number of valid pass days within the accrual date range by the total number of valid days in the membership and then multiplying that number by the total fees charged for the pass.
For Example: A Bedford Falls Annual Resident Membership is good for one (1) year from purchase (365 days) and costs $1200.00. If the accrual date range is 1-30 June, the accrual amount will be $98.63 as the following formula shows:
30 valid pass days in June divided by 365 total pass days = .0821917 times $1200 total fees charged = $98.63 to accrue.
Punch Passes
RecTrac determines the accrual factor for punch passes by dividing the number of punches used during the accrual date range by the total number of punches on the pass when sold and multiplying the result by the total fee charged for the pass.
For Example: George Nelson buys a 20-punch pass for $100.00. During July, he uses that pass five (5) times. If the accrual date range is 1-31 July, the accrual amount on George’s pass will be $25, as the following formula shows:
Five (5) punches used during the accrual date range divided by 20 total punches at time of purchase = .25 times $100.00 total fees = $25.00 to accrue.
Point of Sale Module
Accrual in Point of Sale is based on the event date and uses logic similar to the Facility Module. Generally speaking, POS Tickets only will have/might have an Event Date different than the Sale Date, so a POS Ticket purchased on 23 March for event on 09 April will accrue in April but POS Service Items or Inventory purchased on 23 March will accrue in March.
Rental Module
RecTrac determines the accrual factor of the rental record by dividing the number of valid rental days in the accrual date range by the total length of the rental in days and then multiplying the result by the total fees charged for the rental.
For Example: You rent Sunfish sailboats for $25/day. The Van Helsing family rents a Sunfish sailboat for seven (7) days ($175.00). If three (3) of those days fall within your accrual date range, the accrual amount will be $75.00, as the following formula shows:
Three (3) valid rental days in the accrual date range divided by seven (7) total rental days = .428571 times $175.00 total fees for the rental = $75.00 to accrue.
League Module
RecTrac determines the accrual factor for each team by dividing the number of games a team played during the accrual date range by the total number of league games and multiplying the result by the total fees charged for league registration.
For Example: Registration fees for the Senior Softball League are $100.00. Each team plays a 20 game schedule. If the Golden Oldies team plays eight (8) games within your accrual date range, the amount to accrue will be $40.00 as the following formula shows:
Eight (8) games in the accrual range divided by 20 total games for the season = .4 times $100.00 registration fee = $40.00 to accrue for the Golden Oldies
Trip Module
Trip accrual is based on the trip departure date and uses logic similar to the Facility Module.
Court Module
Court accrual is based on the reservation date and uses logic similar to the Facility Module.
Personal Trainer
Accrual is based on the reservation date and uses logic similar to the Facility Module.
Locker Module
To determine accrual for locker rentals, RecTrac divides the number of valid days in the accrual date range by the total length of the locker rental (in days) and multiplies the result by the total fees charged for the locker rental.
For Example: Roger Shrubber rents a locker for the Fall semester (180 days), the charge for which is $200.00. School starts on 07 September. When running accrual for the period 1-30 September, you will accrue $26.66 as shown by the formula below:
24 valid rental days (7-30 September) divided by 180 total rental days = .1333 times $200.00 total fees for the rental = $26.66 to accrue.
Running the Accrual Program
General Note Regarding the Accrual Date Range
As a general rule, most departments run accrual monthly on the first business day of the current month for the entire preceding month. For Example: You might run accrual on 01 July for the month of June.
However, you can run accrual as often or as seldom as you like (Daily, Weekly, Monthly, Quarterly, Semi-Annually, etc…). Regardless of your accrual schedule, Vermont Systems highly recommends that you stay consistent and run it at your regularly scheduled intervals.
Selecting your Begin Date
Regardless of the time period you want to accrue, Vermont Systems recommends that you always select 01/01/1900 as your Beginning Accrual Date. Doing this will allow RecTrac to look at each and every potential accrual date in the past and collect any records that might have been skipped for any reason, such as back-dating a transaction or making changes to fees "after the fact."
For Example: On 01 July you run accrual for 01-30 June. One of the records is a $200.00 facility rental on 29 June. On 02 July, you increase fees on that rental by $50.00 due to damages to the facility. On 01 August, you run accrual for 01-31 July. The fee increase you posted on 02 July will be skipped because RecTrac bases facility accrual on the reservation date. In this case, the reservation took place on 29 June so the fees you adjusted after the fact will not be included in the accrual run unless the reservation date is included. Setting your beginning date to 01/01/1900 would ensure those new fees get accrued.
The Ending Date is also the Posting Date
The Ending Date in your date range is your Posting Date. So if you run accrual on July 03, 20xx for the period 01/01/1900 - 06/30/20xx, your Posting Date will be 30 June 20xx.
The Ending Accrual Date is also the date that the system records as the Last Accrual Date on all history records being accrued. The system recognizes the Last Accrual Date as the "This record has been accrued THROUGH this date" date, so, running accrual and posting with an invalid date range can cause the system to skip accruing money for a particular time period.
For Example: The last time you ran accrual (on 02 May), you used 01/01/1900 – 04/30/20xx as your date range. When running accrual for May, you mistakenly make the date range 05/31/20xx – 05/31/20xx and post it. Now the system reads all those records as being accrued THROUGH 05/31/20xx when in fact you skipped the time period from 05/01 – 05/30. Your postings will be off for May.
In the event something such as this happens, the system will "catch itself up" eventually. See the Special Note below for an explanation and example. If the posting date range error needs to be corrected immediately, contact Vermont Systems Support for assistance.
Running Accrual
- In RecTrac, search for and go to Accrual Processing.
- Select the modules for which you wish to post Accrual.
- Click the Calendar iconto select your Beginning and Ending Accrual Dates.
- Beginning Date - As a general rule, it is always safe to pick a Beginning Date far in the past, as doing so ensures that any Accrual that may have been missed gets collected in this run. For example, you might select a Beginning Date of 01/01/1900.
- Ending Date - This should be end of your most recent Accrual period and should not be a date in the future. For example: if running accrual monthly, you would run accrual on the first day of the "this" month for the period ending on the last day of "last" month, such as running Accrual on 01 December for the period ending on 30 November.
- If you are running Accrual for the Rental Module, then expand the Rental Options group and make selections as needed. The settings in this group will override your settings for the Rental Module on your Static Parameters profile.
Note: RecTrac will accrue all outstanding records within the date range entered. The End Accrual Date is also the Posting Date. In the example above, any outstanding accrual transactions from 01/01/1900 through 11/30/2020 would be accrued and the accrual amounts would post to the RecTrac GL on 11/30/2020.
The ability to run Accrual Processing with an Ending Date in the future is controlled by Permissions. In the standard Vermont Systems design: Permissions profile • Buttons/Misc Permissions tab • Miscellaneous Settings group • Future Accrual Dates - Allow Override field
- Ensure your Posting Cash Drawer is correct. In most instances, this should be the Drawer to which your User ID is linked.
Note: If you are using the End of Shift process in RecTrac and you want the accrual GL figures to be reflected on the Consolidated End of Shift report, ensure that the Posting Cash Drawer is associated with an open batch.
- Determine your Posting Date Option.
- Skip the Post Accrual field, select PDF as your Report Output Option, and select a Report Print Option (Detail or Summary).
- Click Process. This will generate a preview report allowing you see what amounts will moved from which Unearned Account(s) to Revenue Account(s) for the Module(s) selected. Vermont Systems highly recommends generating a preview report prior to posting accrual.
- When you have reviewed the preview report, go back and enable the Post Accrual option.
THEN
Re-select your Output and Print Options, if different. - Click Process to run Accrual Posting.
Installment Billing and Accrual
If you use Accrual and run Installment Billing/Auto-Debit, keep in mind the following:
- Running Installment Billing makes receivables entries.
- Run billing before you run accrual if you use installment billing. RecTrac will accrue the billing amounts; however, it can only accrue fees that have been charged.
For Example: You charge $1200 for an annual pass membership. The cost is $100 at the time of purchase and you installment bill 11 payments of $100. John Henry "Doc" Holliday purchases a pass on 21 January and pays $100. The first bill is set up for 01 March. You run accrual on Feb 01. RecTrac will accrue $100.00 for Doc Holiday's pass due to the fees being charged.- If you run accrual for March BEFORE you run billing, RecTrac will accrue nothing for Doc Holiday's pass for March because no new fees have been charged.
- IF you run accrual for March AFTER you run billing, RecTrac will accrue $100.00 for Doc Holiday's pass because fees have been charged.
So the key is the timing. Run billing PRIOR to running accrual if you use installment billing.
Notes:
- Installment billing with auto debit/ACH run on a monthly basis is already accrual-based in nature. Since you are running billing once a month, fees billed for that month can hit revenue during that month. Depending on your billing situation, you might not want to setup your Installment Bills to be accrued. Contact Vermont Systems Support to discuss your options, if needed.
- IF You Charge Initial Fees: Remember that when taking initial payments in addition to any installment bills or auto-debiting, the accrued amount will also take into consideration these fees/payments.
For Example: Pablo Fanque purchases a 12-month pass in May. The Initial Fee is $75.00 at the time of purchase, and the Pablo will be billed $100 per month for 12 months. Therefore, the total cost of this pass will be $1,275.00 [75 + (12 x 100)]. When calculating the amount accrued per day, you include the $75 initial fee. Running accrual for the month of July, for example, would accrue $108.29 (31 days in July divided by 365 total days times $1275.00 in total fees = $108.29.
Detailed Accrual Processing Examples
The detailed examples below describe how accrual processing works in the Activity, Facility, Pass, and Rental modules of RecTrac. The examples assume the following:
- Accrual Processing is run on a monthly basis.
- Accrual Processing is run on the first business day of the month for the previous month (i.e. you run accrual on 01 July for the period 01-30 June).
- The Posting Date Option on the Accrual Processing program is set to "End Date."
- Your Accrual Option (Static Parameters profile) is set to Through Item Dates
Remember: Vermont Systems recommends running accrual on a monthly basis as described above an in the examples below. How often you run the accrual process is your decision. For Example: You could run the accrual process every day for the single previous day. In this case you would earn revenue for just that single day. Optionally, you could run accrual once per quarter. In this event, you would earn revenue for a 3-month period.
Special Note: Regardless of the module in RecTrac, there is a built in "Catch-up" feature when running accrual. In some situations, there could be money left on a history record at the end of the accrual time period, based on rounding for example. RecTrac will ALWAYS accrue ALL money left on a history record when that record ends. So, if you miss a month for whatever reason; once the history records go past their end date (the activity reaches its end date, a pass expires, the reservation date passes, etc…), the system will automatically accrue everything left.
For Example: Alice Kramden buys a yearly membership in January for $1200. You run accrual every month for the next year, accruing approximately $100 each month, but you skip the month of September. When you run accrual for December of that year, you would accrue a total of $200: the $100 for the pass in December AND the $100 left on the pass that was skipped when you missed running accrual in September.
Activity Module Example
This section describes how the accrual process works in the Activity module. In this example:
- The Receivables Account is linked in the Receivables GL Code field on the Static Parameters profile.
- The Receivables Account is linked in the Receivables GL Code field on the Tax Table.
- The Receivables GL Code is 930, the Unearned Revenue Account is 932, the Revenue Account is 901, and the Tax Liability Account is 112.
To determine the accrual rate for activity enrollments, RecTrac divides the number of sessions/meeting dates within the accrual date range by the total number of sessions/meeting dates for the Activity Section and multiples the product by the total fees charged for the enrollment.
Example
Bobbie Sox signs up for a Coed Volleyball class on January 18, 20xx and pays the full amount. The class starts on February 08 and ends on March 31. The class meets twice a week for a total of 16 class sessions. The fee for the class is $160 plus $6.40 tax. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
160.00 |
|
6.40 |
|
|
|
|
|
|
|
166.40 |
|
|
160.00 |
|
6.40 |
|
160.00 |
|
6.40 |
|
|
|
Note: The cash offset is made by the Finance Department in their general ledger. It is displayed in this table to show that the transaction is in balance only.
Accrual Processing is run on the first business day of the month for the preceding month. When accrual is run in February for the period 01-31 January, no revenue will be earned because the class does not meet during the month of January.
When accrual is run in March for the period 01-28 February, Unearned Revenue will be debited and revenue will be earned by an equal amount. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
60.00 | |||||||||||
60.00 |
The class met six (6) times during the month of February. The accrual factor is .375 (6/16). The total amount accrued for February is $60.00 (.375 x $160 total fees = $60.00). As a result of running Accrual Processing, the Unearned Revenue Account (932) was debited $60.00 and the Earned Revenue Account (901) was credited $60.00. The posting is made to the Ending Accrual Date selected when running the accrual processing program, which in this case is 28 February.
At the beginning of April, the you run Accrual Processing again, this time for the period 01-31 March. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
100.00 | |||||||||||
100.00 |
The class met 10 times during the month of March. The accrual factor is .625 (10/16).The total amount accrued for March is $100.00 (.625 x $160 total fees = $100.00). As a result of running Accrual Processing, the Unearned Revenue Account (932) was debited $100.00 and the Earned Revenue Account (901) was credited $100.00. The posting is made to the Ending Accrual Date selected when running the accrual processing program, which in this case is 31 March.
When accrual is run for April, no entries will be made to the general ledger for this transaction because the class has ended and all the revenue has been earned for this activity registration.
Summary of money moved from Unearned Revenue to Earned Revenue
Month | Amount moved from Unearned Revenue to Earned Revenue |
---|---|
January | $0.00 |
February | $60.00 |
March | $100.00 |
April | $0.00 |
Total | $160.00 |
Note: If you backdate registrations or make changes to registrations for activities that have already ended after you have run the accrual process for that month, the financial information for these enrollments will not be accrued until you re-run the accrual process for the dates the class took place.
To avoid having to re-run accrual processing when these situations occur, you should always use 01/01/1900 as your Beginning Accrual Date.
Additional Notes Regarding Accrual and the Activity Module
- If a section is archived BEFORE all enrollment records for that activity have been fully accrued, RecTrac will try to accrue it every time you run the accrual process regardless of your accrual date range. Accrual for the Activity Module is based on section meet dates, so the records that need to be accrued in the archive do not have specific meet days, but RecTrac knows they need to be accrued so those records will be picked up in the next accrual run.
Facility Module Example
This section describes how the accrual process works in the Facility Module. In this example:
- The Receivables Account is linked in the Receivables GL Code field on the Static Parameters profile.
- The Tax Liability Account is linked in the Receivables GL Code field on the Tax Table.
- The Receivables GL Code is 930, the Unearned Revenue Account is 932, the Revenue Account is 901, and the Tax Liability Account is 112.
Accrual for the Facility Module is determined on the date of the reservation. It is NOT determined by the date on which the reservation was made, unless both dates are the same.
Example
P. T. Barnum makes a reservation for a pavilion on 18 January, 20xx. The date of the reservation is 23 February. The fees charged for the reservation are $85. The tax charged is $4. The amount paid when making the reservation on January 18 is $0.00 The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
85.00 | 4.00 | ||||||||||
85.00 | 4.00 |
Accrual Processing is run on the first business day of the month for the preceding month. When accrual is run in February for the period 01-31 January, no revenue will be earned because the reservation does not take place until February.
When Accrual Processing is run in March for the period 01-28 February, revenue will be earned because the reservation took place on 23 February. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
85.00 | |||||||||||
85.00 |
As a result of running accrual processing for the month of February, the Unearned Revenue Account (932) was debited $85 and the Earned Revenue Account (901) was credited $85. The posting is made to the Ending Accrual Date selected when running the accrual processing program, which in this case 28 February.
Up to this point, the P. T. Barnum has not paid. He finally remits on 17 March. The Receivables Account is credited by $89. The Cash Offset Account is then debited by $89. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
89.00 | |||||||||||
85.00 | 4.00 |
Note: The cash offset is made by the Finance Department in their general ledger. It is displayed in this table to show that the transaction is in balance only.
Summary of money moved from Unearned Revenue to Earned Revenue
Month | Amount moved from Unearned Revenue to Earned Revenue |
---|---|
January | $0.00 |
February | $85.00 |
March | $0.00 |
Total | $85.00 |
Note: If you backdate reservations or make changes to reservations that occurred in the past after you have run the accrual process for that month, the financial information for these reservations will not be accrued until you re-run the accrual process for the dates the reservations took place.
To avoid having to re-run accrual processing when these situations occur, you should always use 01/01/1900 as your Beginning Accrual Date.
Additional Notes Regarding Accrual and Facility Deposits
- Receivable entries are made to the Receivables Account specified on the Deposit Fee, or to the Receivables Account specified on your Static Parameters profile in the event you do not pick a Receivables Account on the Fee. While it is expected that deposits will always be paid at the time of the reservation, a GL Account is required because once the RecTrac database is set to receivables, everything is considered a receivable.
- Deposits are not accrued unless all or part of it is applied toward a damage fee. Accrual only affects the fees charged toward a service. When you refund the deposit to the household, the Deposit Account linked to the Facility Location will be debited the amount of the refund.
- Deposits can be accrued IF part or all of it is applied toward damage fees linked to a Fee set up for accrual.
Pass Module Example
This section describes how the accrual process works in the Pass Module for a standard pass membership (i.e. NOT a punch pass).
- The Receivables Account is linked in the Receivables GL Code field on the Static Parameters profile.
- The Tax Liability Account is linked in the Receivables GL Code field on the Tax Table.
- The Receivables GL Code is 930, the Unearned Revenue Account is 932, the Revenue Account is 901, and the Tax Liability Account is 112.
Accrual for standard memberships is determined by dividing the number of valid pass days within the accrual date range by the total number of valid days in the membership and then multiplying that number by the total fees charged for the pass.
Example
Mark Spitz signs up for a Pool pass on 20 April, 20xx and pays the full amount. The pass membership is valid from May 24, 20xx to September 06, 20xx. The pass is valid for exactly 106 days. The fee for the pass is $500 plus $20 tax. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
500.00 | 20.00 | 520.00 | |||||||||
500.00 | 20.00 | 500.00 | 20.00 |
Note: The cash offset is made by the Finance Department in their general ledger. It is displayed in this table to show that the transaction is in balance only.
Accrual Processing is run on the first business day of the month for the preceding month. When accrual is run in early May for the period 01-30 April, no revenue will be earned because the pass is not yet valid.
When Accrual Processing is run for May, revenue will be realized. There are eight (8) valid pass dates in May (24-31), so the accrual factor for May is .07547 (8/106). Total amount accrued for May is $37.74 (.07547 x 500 total valid pass days = $37.74). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, which in this case is 31 May.
The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
37.74 | |||||||||||
37.74 |
When accrual is run for June, revenue will be realized again. There are 30 valid pass dates in June (01-30), so the accrual factor for June is .28302 (30/106). Total amount accrued for June is $141.51 (.28302 x 500 total valid pass days = $141.51). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, which in this case is 30 June.
The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
141.51 | |||||||||||
141.51 |
Additional revenue will be realized when accrual is run for July. There are 31 valid pass dates in July (01-31) so the accrual factor for July is .29246 (31/106). Total amount accrued for July is $146.23 (.29246 x 500 total valid pass days = $146.23). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, which in this case is 31 July.
The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
146.23 | |||||||||||
146.23 |
An additional $146.23 in revenue is realized when accrual is run in early September for the month of August. There are 31 valid pass dates in August (01-31) so the accrual factor for August is .29246 (31/106). Total amount accrued for August is $146.23 (.29246 x 500 total fees = $146.23). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, which in this case is 31 August.
The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
146.23 | |||||||||||
146.23 |
The remaining revenue is realized when accrual is run for the month of September. There are six (6) valid pass dates in September (01-06) so the accrual factor for September is .05660 (6/106). Total amount accrued for May is $28.29 (.05660 x 106 total valid pass days = $28.29). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, which in this case is 30 September.
The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
28.29 | |||||||||||
28.29 |
When the accrual process is run for October, no entries will be made to the general ledger for this transaction because the pass has expired and all the revenue has been earned for Mark's pass.
Summary of money moved from Unearned Revenue to Earned Revenue
Month | Amount moved from Unearned Revenue to Earned Revenue |
---|---|
April | $0.00 |
May | $37.74 |
June | $141.51 |
July | $146.23 |
August | $146.23 |
September | $28.29 |
October | $0.00 |
Total | $500.00 |
Note: In the example above, the actual accrual amount for the September run is $28.30, which would make the total amount $500.01. Because you cannot accrue more than the sale price of the pass, RecTrac will drop the penny on the September automatically.
If you backdate pass registrations or make changes to pass records that have already expired after you have run the accrual process for that month, the financial information for these reservations will not be accrued until you re-run the accrual process for the dates in question.
To avoid having to re-run accrual processing when these situations occur, you should always use 01/01/1900 as your Beginning Accrual Date.
Additional Notes Regarding Accrual and the Pass Module
- Daily Pass Visits linked to the Internal Household do NOT make receivables entries, nor are they accrued.
- Regular or Guest pass visit fees linked to a household make receivables entries using the Receivables GL account linked to the Visit Fee. If that is not defined, RecTrac will use the Receivables GL account linked on the Static Parameters profile.
Rental Module Example
This section describes how the accrual process works in the Rental Module. In this example:
- The Receivables Account is linked in the Receivables GL Code field on the Static Parameters profile.
- The Tax Liability Account is linked in the Receivables GL Code field on the Tax Table.
- The Receivables GL Code is 930, the Unearned Revenue Account is 932, the Revenue Account is 901, and the Tax Liability Account is 112.
- Override settings for the Rental Module on the Accrual Processing program, itself, are NOT being invoked.
RecTrac determines the accrual factor of the rental record by dividing the number of valid rental days in the accrual date range by the total length of the rental in days and then multiplying the result by the total fees charged for the rental.
Example
Eddie Johnson makes a reservation for an RV slot on 20 January, 20xx. The reservation begin date is 01 February 1, and the last date of the reservation is 31 July 31. Total rentals days are 181. The fees charged for the reservation are $500. The tax charged is $20. The amount paid on 20January is $85. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
500.00 | 20.00 | 85.00 | |||||||||
81.73 | 3.27 | 500.00 | 20.00 |
Note: The cash offset is made by the Finance Department in their general ledger. It is displayed in this table to show that the transaction is in balance only.
Accrual Processing is run at the end of each month. When accrual is run for January, no revenue is realized because the reservation does not start until February.
When Accrual Processing is run for February, revenue is earned. There are 28 valid rental days in February (01-28), so the accrual factor for February is: .15469 (28 /181). Total amount accrued for February is $77.35 (.15469 * 500 = 77.35 – rounded up). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, which in this case February 28.
The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
77.35 | |||||||||||
77.35 |
On 12 March, Eddie makes a $85.00 payment. The Receivables Account is credited a total of $85.00, split out for revenue and tax receivables. The Cash Offset Account is then debited by $85.00. The following entries are made to the general ledger on the date of the payment:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
85.00 | |||||||||||
81.73 | 3.27 |
Note: The cash offset is made by the Finance Department in their general ledger. It is displayed in this table to show that the transaction is in balance only.
Additional revenue is earned when accrual is run for March. There are 31 valid rental days in March (01-31), so the accrual factor for March is .17127 (31 /181). Total amount accrued for March is $85.64 (.1546961 * 500 = 85.64 – rounded up). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, which in this case is 31 March. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
85.64 | |||||||||||
85.64 |
At the end of April, the Accrual Process is run again. There are 30 valid rental days in April (01-30), so the accrual factor for April is .16574 (30 /181). Total amount accrued for April is $82.87 (.16574 * 500 = 82.87). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, in this case 30 April. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
82.87 | |||||||||||
82.87 |
To this point, Eddie Johnson has paid $170.00. Total fees and tax charged for this RV slot reservation were $520. On 20 April, Eddie pays the remaining balance and tax due of $350. The following entries will be made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
350.00 | |||||||||||
336.51 | 13.46 |
Note: The cash offset is made by the Finance Department in their general ledger. It is displayed in this table to show that the transaction is in balance only.
For purposes of example, we’ll say that accrual is NOT run at end of May. No revenue is realized and not posting is made.
At the end of June, Accrual Processing is run. As discussed above, using 01/01/1900 as the start date ensures any revenue that was "skipped" will be realized. Because accrual was not run for May, there are 61 valid rental days in the accrual run for June (01 May – 30 June), so the accrual factor for is .33701 (61 /181). Total amount accrued for June = $168.51(.33701 * 500 = 168.51 – rounded up). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, in this case 30 June. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
168.51 | |||||||||||
168.51 |
Accrual is run at the end of July. There are 31 valid rental days in July (01-31), so the accrual factor for July is .17127 (31 /181). Total amount accrued for July is $85.63 (1546961 * 500 = 85.63 – rounded down). The posting is made to the Ending Accrual Date selected when running the Accrual Processing program, in this case 31 July. The following entries are made to the general ledger:
Receivables (930) |
Tax Receivables (930) |
Unearned Revenue (932) |
Tax Liability (112) |
Earned Revenue (901) |
Cash Offset | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit | Debit | Credit |
85.63 | |||||||||||
85.63 |
No entries will be made when accrual is run for August because the rental has ended and all revenue has been earned for this RV slot reservation.
Summary of money moved from Unearned Revenue to Earned Revenue
Month | Amount moved from Unearned Revenue to Earned Revenue |
---|---|
January | $0.00 |
February | $77.35 |
March | $85.64 |
April | $82.87 |
May | $0.00 |
June | $168.51 |
July | $85.63 |
August | $0.00 |
Total | $500.00 |
Note: In the example above, during the last accrual run for July the actual calculation of money to accrue was 85.64 (including rounding), but the system accrued 85.63 because it can only accrue fees charged in total and accruing 85.64 would make the total accrued 500.01. The extra penny in this example comes from the accrual calculations rounding up every month. RecTrac knows to not accrue extra money due to rounding.
If you backdate rental reservations or make changes to reservations that have already happened after you have run the accrual process for that month, the financial information for these reservations will not be accrued until you re-run the accrual process for the dates in question.
To avoid having to re-run accrual processing when these situations occur, you should always use 01/01/1900 as your Beginning Accrual Date.
Accrual and Receivables Reporting
- In RecTrac, search for and go to Accrual / Unearned Income Reports. You have two (2) default options:
- VSI - Accrual History Report
- VSI - Unearned Income Report
- Sample images can be found in the Report Output Listing program.