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Repair to Damaged Property - Accounting Question

Discussion in 'Business Operations' started by CWilliams, May 16, 2005.

  1. CWilliams

    CWilliams LawnSite Member
    Messages: 60

    We broke a glass door a few weeks ago. The customer had the door repaired. Instead of us writing him a check, he would just like us to mow his lawn for free until we are even.

    What is the proper way to handle this in our accounting system?

  2. BCSteel

    BCSteel LawnSite Senior Member
    Messages: 876

    Cut him a cheque, then its done and over with right away and there is no room for any dicking around on thier side.
  3. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    That is a debit and credit General Journal entry. Easier just to pay for the damage with a check from you.
  4. jimbuck

    jimbuck LawnSite Member
    from MA
    Messages: 15

    You can debit the expense account (damages/repair costs) and credit Accounts Receivable for the client. This will give the client a credit balance and you will have correctly recorded the expene. Each time you mow, record the transaction which will credit(increase) revenue and debit the accounts receivable for the client. Eventually you will offset the credit balance and the client will once again owe you money.

    Debit Exp $250.00
    Credit A/R client $250.00 Client shows a credit balance

    Each time you mow
    Debit A/R client Balance 40.00
    Credit Revenue 40.00

    In the example above after the 7th mowing the client will owe you $30.00. You will have recored the $250.00 expense and correctly recorded the $280.00 in revenue.
  5. CWilliams

    CWilliams LawnSite Member
    Messages: 60

    Thanks for the responses. I use QuickBooks. How do I records the expense? I know how to record the credit to the customer's account.

  6. jimbuck

    jimbuck LawnSite Member
    from MA
    Messages: 15

    I'm checking write now. I have a copy of quickbooks pro 2004.
  7. CWilliams

    CWilliams LawnSite Member
    Messages: 60

    Thanks! I figured it out! You all are the best!
  8. jimbuck

    jimbuck LawnSite Member
    from MA
    Messages: 15

    Easiest way is up top in the Menu Bar select Company/Make a Journal Entry.
    Select the date you want
    In the Account drop down pick an EXPENSE ACCOUNT (Misc Expense)
    Put the amount in the DEBIT field
    Put a good description in the MEMO FIELD. No need for a name on the expense

    Then click the account field below the line you just did and pick Account Receivable
    Put the amount in the CREDIT field
    Use the same description in the MEMO FIELD
    VERY IMPORTANT in the NAME section pick the client.
    SAVE and CLOSE.

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