Recording Prepaid Pledges in QuickBooks Desktop
Are you wondering how to record the prepaid pledges donors are sending in because of the new tax reform? In this video, I'll take you through the steps to set up a prepaid pledges account that will allow the donation to reflect on the Donor Acknowledgement letter. (Please NOTE: This is designed for management reporting purposes only; specifically religious organizations who do not need to file a tax return or a 990.)
- Set up a new account in the Chart of Accounts called "Prepaid Pledges/Unearned Donations". It must be a Current Liability.
- Set up a new Item as a Service called "Prepaid Pledges" and tie to the Prepaid Pledges/Unearned Donations account.
- Record the prepaid donation as a Sales Receipt in December using the Prepaid Pledges item.
- In January, record the donation as an Invoice using your regular Pledges/Donations item.
- Issue a Credit Memo to the donor dated January, using the Prepaid Pledges item.
Your system should now give the donor credit for the donation in the 2017 and on your management reports in 2018.