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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Oct 23, 2014
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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