Sage 100 AR Deferred Revenue Posting

The Sage 100 AR Deferred Revenue (ARDR) Posting for Sage 100 enhancement allows future revenue and deferred postings to the General Ledger to occur during the A/R Invoice Update. This enhancement adds two new fields to the Invoice Data Entry screens for ‘Number of Months’ and ‘Start Date’.  When these fields are entered by the user, future postings will occur on the same day each month and automatically for the number of months specified for each item that has a Deferred Revenue Account defined.

What is Deferred Revenue?

Deferred Revenue (or “unearned revenue”) is income for goods or services which have not yet been rendered.  Deferred Revenue is recorded as a liability on the balance sheet to represent services that are owed to the customer. As the product or service is delivered, it can then be recognized as revenue on the income statement.

General Ledger accounts for deferred revenue can be defined by miscellaneous item or by product line when using Standard Inventory Items.  Additionally, the ARDR enhancement adds a new history file to the Sage 100 system in order to keep track of “future” general ledger postings which allows you to create a Crystal Report for deferred revenue forecasting.

During A/R Invoice Update, if a Deferred Revenue account exists in Miscellaneous Item Maintenance for a Miscellaneous Line Item, then the posting to Revenue that would normally occur is changed to post to Deferred Revenue, for the Posting Date. Future postings are then created as follows:

• Debit the Deferred Revenue Account for that Item as set up in Miscellaneous Item Maintenance.
• Credit the Revenue Account for that Item as set up in Miscellaneous Item Maintenance.
• The amount posted for the “future” Debit and Credit are the Line Extension divided by the Number of Months.

This enhancement is beneficial to companies that sell Support Contracts or Maintenance Plans. The objective is to credit the overall Contract/Plan amount to Deferred Revenue for the Posting Date, and then credit Revenue and debit Deferred Revenue in future months.

Examples of instances where deferred revenue is used:

• Magazine Subscription Services
• Online Sellers
• Maintenance Workers
• Seller of Goods