Accounting with Dockwa: Accrual-Basis Entries

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Overview

The following are best practices for translating Dockwa reporting data into journal entries you can make in your accounting software. Follow these instructions for accrual-basis accounting only.

For details on how to use Dockwa reporting for other purposes, please see Accounting with Dockwa: Reports.

We recommend using summary journal entries in your accounting software to record the detailed transactions stored in Dockwa. This means relying on Dockwa for detailed accounting information and not duplicating every single record into your accounting software. This is similar to how many businesses perform payroll accounting. Your payroll software serves as the source document that stores all the details of every employee and every hour worked. You then make summary journal entries into your accounting software to capture the summary record of each payroll.

We recommend relying on Dockwa for your detailed financial data. Examples of detailed financial data are: a single line item from a single sale; revenue from a single night of a two-week reservation; a credit card downpayment for a single reservation.

And we recommend making periodic summary journal entries in your accounting software so that your accounting software can report accurate summary information. Examples of summary financial information are: total sales for a period; total unpaid invoices; total cash transferred to your bank account.

For example, your accounting software might report gross sales of $10,000. If an auditor or a manager wanted to know what specific underlying transactions added up to that $10,000 total, you would run a report from Dockwa to access that detailed information.

Using summary journal entries in your accounting records saves time and improves accuracy. Instead of trying to maintain two duplicate sets of records, you can use your accounting software for financial reporting and you can use Dockwa for your detailed financial data.

Intended Audience

This document is intended for accounting and bookkeeping professionals who are:

  • Familiar with basic accounting concepts

  • Familiar with accounting software

  • Comfortable recording adjusting journal entries

  • Comfortable with basic Excel calculations

Frequency

Dockwa is designed to support monthly summary journal entries in your accounting software. However, you can make entries more or less frequently depending on your business needs.

New accounts

Before making any entries, create the following accounts in your account software:

Dockwa Clearing Account

  • Account type: Bank

  • Name: Dockwa Clearing Account

  • Details:

    • When you get paid via credit card, the funds first go into a clearing account in Dockwa. The money is yours even though it hasn’t been transferred to your bank account yet.

    • Dockwa transfers this cash to your bank account periodically

    • All credit card processing fees are paid out of this account before funds are transferred to your bank account

    • For accounting purposes, this account behaves like any other bank account

Dockwa Expense

  • Account type: Expense

  • Name: Dockwa Expense

  • Details:

    • This account will record the credit card processing fees you pay to Dockwa

Dockwa Deferred Revenue

  • Account type: Current Liability

  • Name: Deferred Dockwa Revenue

  • Details:

    • This account will record the funds you receive from customers before you have fulfilled your obligations to them

    • For GAAP compliance, any funds you receive before you have fulfilled your performance obligation to your customer must be offset by a liability

    • Use this account as a routing account. All revenue is first routed through this account, and then recognized. Some revenue is recognized immediately, some is not recognized until a later period, but it all flows through this account first.

Dockwa Receivables

  • Account type: Accounts Receivable

  • Name: Dockwa Receivables

  • Details:

    • We recommend you track your individual invoices in Dockwa and record a summary receivable total in your accounting software

    • We recommend you create this separate account to segregate Dockwa receivables from other invoices you may issue directly via your accounting software

Periodic entries

1: Record new invoices

  • Purpose: To record new invoices and refunds

  • Background: Sales and returns made in Dockwa create invoices and credits. Some invoices are settled immediately, some are settled at a later date. We recommend routing all invoices and credits through your Dockwa Deferred Revenue account and recognizing revenue in a separate entry.

Procedures

  1. Navigate to dockwa → reports → invoices

  2. Export the report using the following settings:

    1. Export type: by date posted

    2. Start date: first day of period

    3. End date: last day of period

  3. Open the report to the invoices tab

    1. Calculate total new invoices for the period

      1. Calculate the sum of the total column

    2. Calculate sales tax liability for the period

      1. Calculate the sum of the sales tax column

  4. Calculate new invoices, net of tax

    1. Subtract sales tax liability from total new invoices

  5. Record a journal entry using the following information

    1. Debit: Dockwa Receivables

      1. Amount: total new invoices for the period

    2. Credit: Dockwa Deferred Revenue

      1. Amount: new invoices, net of tax for the period

    3. Credit: Sales Tax Payable

      1. Amount: sales tax liability for the period

  6. Example:

    1. new invoices: $105,000

    2. new invoices, net of tax: $100,000

    3. sales tax liability: $5,000

    4. Journal entry:

 

Debit

Credit

Dockwa Receivables

$105,000

 

Dockwa Deferred Revenue

 

$100,000

Sales Tax Payable

 

$5,000

2: Record payment of invoices

  • Purpose: To record payment of invoices

  • Background:

    • Payments received via credit card are automatically deposited to your Dockwa Clearing Account

    • Payments via cash, check, or ACH are deposited to you bank account (by you) and reduce the amount of your unpaid invoices

    • Payments via cash, check, or ACH are self-reported (by you) into Dockwa. Unlike credit card transactions, this process requires manual input. Dockwa keeps a record of these transactions but relies on the accuracy of your entries.

Procedures

  1. Navigate to dockwa → reports → transactions

  2. Export the report using the following settings:

    1. Start date: first day of period

    2. End date: last day of period

  3. Open the report to the transactions tab

    1. Calculate net amount received via credit card

      1. Filter the status column to include:

        1. succeeded

      2. Filter the method column to include:

        1. credit

      3. Calculate the filtered sum of the gross column

        1. If using Excel, you can use the sumif formula to calculate this value

    2. Calculate net amount received via cash

      1. Filter the status column to include:

        1. succeeded

      2. Filter the method column to exclude:

        1. credit

      3. Calculate the filtered sum of the gross column

        1. If using Excel, you can use the sumif formula to calculate this value

  4. Record a journal entry using the following information

    1. Debit: Dockwa Clearing Account

      1. Amount: net amount received via credit card

    2. Debit: Undeposited Funds

      1. Amount: net amount received via cash

    3. Credit: Dockwa Receivables

      1. sum of net amount received via credit card + net amount received via cash

  5. Example:

    1. net amount received via credit card: $60,000

    2. net amount received via cash: $24,000

    3. Journal entry:

 

Debit

Credit

Dockwa Clearing Account

$60,000

 

Undeposited Funds

$24,000

 

Dockwa Receivables

 

$84,000

3: Make a bank deposit

  1. Deposit cash receipts to your bank as you normally would

  2. Record a deposit in your accounting software. In your deposit entry, include the Undeposited Funds recorded in the previous step.

  3. Example:

    1. undeposited funds: $24,000

    2. Deposit entry:

 

Debit

Credit

Your Bank Account

$24,000

 

Undeposited Funds

 

$24,000

4: Record credit card processing fee expense

  • Purpose: To record expenses paid to Dockwa for credit card processing

  • Background: Credit card processing fees are automatically removed from your Dockwa Clearing Account before they are transferred to your bank account

Procedures

  1. Navigate to dockwa → reports → transactions

  2. Export the report using the following settings:

    1. Start date: first day of period

    2. End date: last day of period

  3. Use the report to calculate total processing fees for the period

    1. Filter the status column to include:

      1. succeeded

    2. Calculate the filtered sum of the processing fee column

      1. If using Excel, you can use the sumif formula to calculate this value

      2. Note that processing fees are presented as negative numbers in the transactions report. When recording your journal entry, enter total processing fees as a positive number.

  4. Record a journal entry using the following information

    1. Debit: Dockwa Expense

      1. Amount: total processing fees

    2. Credit: Dockwa Clearing Account

      1. Amount: total processing fees

  5. Example:

    1. total processing fees: $2,100

    2. Journal entry:

 

Debit

Credit

Dockwa Expense

$2,100

 

Dockwa Clearing Account

 

$2,100

5: Record transfer of credit card transaction proceeds

  • Purpose: To update the bank balance in your accounting software for periodic cash transfers from your Dockwa Clearing Account

Procedures

  1. Navigate to dockwa → reports → bank transfers

  2. Export the bank transfer report for a single transfer

  3. Record a journal entry using the following information

    1. Debit: Your Bank Account

      1. Amount: total deposit amount from report

    2. Credit: Dockwa Clearing Account

      1. Amount: total deposit amount from report

  4. Example:

    1. total deposit = $57,900

    2. Journal entry:

 

Debit

Credit

Your Bank Account

$57,900

 

Dockwa Clearing Account

 

$57,900

6: Recognize revenue

  • Purpose: To recognize revenue according to GAAP

  • Background: GAAP requires us to only recognize revenue when we have fulfilled our performance obligation to our customers. For example, if a customer pays up front for a six-month storage contract, we are required to recognize a portion of that payment as revenue each month until the contract is complete.

Procedures

  1. Navigate to dockwa → reports → daily accrual revenue

  2. Export the report using the following settings:

    1. Start date: first day of period

    2. End date: last day of period

  3. Open the revenue summary tab of the report

  4. Record a journal entry using the following information

    1. Debit: Dockwa Deferred Revenue

      1. Amount: total from gross revenue column

    2. Credit: Individual revenue accounts

      1. Amount: individual values in gross revenue column

  5. Example:

    1. transient dockage, gross revenue column: $50,000

    2. electric, gross revenue column: $5,000

    3. seasonal dockage, gross revenue column: $25,000

    4. Journal entry:

 

Debit

Credit

Dockwa Deferred Revenue

$80,000

 

Transient Dockage Revenue

 

$50,000

Electric Revenue

 

$5,000

Seasonal Dockage Revenue

 

$25,000

Summary

In the above examples, the following events occurred:

  • You issued $105,000 in new invoices. Of that total…

    • You recorded $100,000 in deferred revenue

    • You recorded $5,000 in sales tax liability

  • You received $84,000 in settlement of invoices, which reduced your Dockwa Receivables balance. Of that total…

    • You recorded $60,000 in credit card receipts which increased your Dockwa Clearing Account

    • You recorded $24,000 in cash receipts to Undeposited Funds

  • You deposited the $24,000 in cash receipts to your bank account and recorded that deposit

  • Of the $60,000 in credit card receipts…

    • You recorded the expense and payment of $2,100 in credit card processing fees to Dockwa

    • You recorded the automatic transfer of the remaining $57,900 from your Dockwa Clearing Account to your bank account

  • You recognized $80,000 in revenue for services performed which reduced your Dockwa Deferred Revenue balance

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