Accounting with Dockwa: Cash-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 cash-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 month-end 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 accounting 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

Periodic entries

1: Record cash-basis revenue

  • Purpose: To record cash-basis revenue

  • Background:

    • All cash payments received through Dockwa need to be recorded as revenue in your accounting software

    • 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 → daily sales

  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 daily sales itemized tab

    1. Calculate net amount received via credit card

      1. Filter the payment method column to include:

        1. credit

      2. Calculate the filtered sum of the total 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 payment method column to exclude:

        1. credit

      2. Calculate the filtered sum of the total column

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

  4. Open the daily sales summary tab of the daily sales report

  5. 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: Individual revenue accounts

      1. For each revenue category in the daily sales summary tab of the daily sales report, record a line corresponding to your business’s revenue accounts

      2. Amount: use values from the net column

    4. Credit: Sales Tax Payable

      1. Amount: sum of all values in tax column

  6. Example:

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

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

    3. transient dockage, net column: $50,000

    4. electric, net column: $5,000

    5. seasonal dockage, net column: $25,000

    6. total of tax column: $4,000

    7. Journal entry:

 

Debit

Credit

Dockwa Clearing Account

$60,000

 

Undeposited Funds

$24,000

 

Transient Dockage Revenue

 

$50,000

Electric Revenue

 

$5,000

Seasonal Dockage Revenue

 

$25,000

Sales Tax Payable

 

$4,000

2: 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

3: 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 month

    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

4: 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

Summary

In the above examples, the following events occurred:

  • You received $84,000 in total receipts. 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 also recorded the $84,000 as cash-basis revenue and sales tax liability

    • You recorded $80,000 in cash-basis revenue

    • You recorded $4,000 to be remitted to your state for sales tax

  • You then 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

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