I wonder if anyone can help me with this?
We receive income for a number of shows These shows can be for events into the future, often past our financial YE. If the show is cancelled, refunds are given.
Currently the situation for accounting is that ALL monies received for shows, is charged straight to the P&L.
This to me seems odd, inacurate and fundamentally incorrect. Revenues are not being matched with expenses, and the company is not recognising the liability that may be arising because of the refund situation.
Currently the accounting entries are:
DR: Bank - Monies received for Tickets
CD: P&L - Ticket Sales
I am proposing this:
DR: Bank - Monies received for ticket sales
CR: Future Sales Account - A liability Account
DR: Future Sales when Events have been undertaken with money for show
CR: P&L As monies are recognised when they have been undertaken
Does anybody else have experience of this? Am I going about this the correct way?
Your help and comments greatly appreciated
With kind regards