We recommend you set-up the following accounts on your balance sheet:
DaySmart Recreation Customer AR
DaySmart Recreation NSF Checks
DaySmart Recreation Refund Checks
We will discuss how you use these accounts later on in this document. But each of these accounts should be zero at each month end; unless you can identify specific items which cause these accounts to maintain a balance. Examples of reasons a balance may exist in each are as follows:
DaySmart Recreation Customer AR – if you have collected a partial payment from a customer. The balance remaining in this account should match your Customer AR Report in DaySmart Recreation.
DaySmart Recreation NSF Checks – if you have booked an NSF Check in your Accounting system but have not recorded it in DaySmart Recreation yet; or if you have booked the NSF in DaySmart Recreation and not yet in your accounting system. Either way, you should be able to identify the specific check(s) which make up the balance remaining in this account.
DaySmart Recreation Refund Checks – Refund(s) entered in your Accounting System which have not yet been entered in DaySmart Recreation. Again, you should be able to identify the specific check(s) which make up this balance.
Why do you need clearing accounts? They are a simple way to enter different cash transactions and the related sales detail associated with them. The below table helps illustrate how these work:
Cash | Clearing Acct | Revenue Detail | |
Daily Deposit | Debit $10,000 | Credit ($10,000) | |
GL Report Entry | Debit $10,000 | Credit ($10,000) | |
Balance | Debit $10,000 | $0 | Credit ($10,000) |
You may ask “why not simply enter the Cash and Revenue?” The main reason is you have multiple types of transactions that affect your cash balance, including (a) bank deposits entries, (b) credit card deposit entries, (c) NSF Checks, and (d) Refund Checks. By using a Clearing Account, you need only worry about using this account in your accounting system, and not the detailed revenue line items for each cash transaction. When these are entered into Dash, all the revenue details are tracked for you and summarized in the GL Report.
In addition, you can simply enter in your Revenue Detail once a month, rather than daily.
Remember, you always want to make sure any entry you make to Cash will match what is going to show up on your bank statement. This simplifies your bank reconciliation process.