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Future Events

Future Events

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

Steve

Steven Noonan

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15th Oct 2008 17:59

Creditors
If you enter sales from invoices I would show the items you are talking about as creditors or deferred revenue. I prefer using deferred revenue when an invoice spans accounting periods not when you just invoice in advance.
Seeing as sales are recorded from money received I would prefer showing them as creditors, especially if they can obtain refunds if they cancel.

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15th Oct 2008 13:37

Deferred income...
Your double entry looks fine. I treat the income as deferred income (on the balance sheet as a creditor) and reverse it out at the time of the event.

You do need to remember to do the same sort of thing for expenses that relate specifically to the show (only the other way around obviously) to keep the matching of income to expenditure.

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