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Thread: Year End, Doubtful Accounts, Accounts Receivable, etc.

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    storage-gal is offline Member
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    Default Year End, Doubtful Accounts, Accounts Receivable, etc.

    HI There,
    I'm doing my first year end and have a couple of questions.

    What is the easiest way to do the doubtful accounts?
    I have kept an excel sheet of all that have gone to collections, and print outs from closed tenants.
    However, the gal before me didn't really do this.
    What would be the easiest way to find these numbers? In the Bad Debt reports, perhaps?

    Can you explain how the accounts receiable works? Is the accountant wanting to know what tenants are late with their payments, due before the year end, but unpaid?

    Thanks!

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    Lisa T's Avatar
    Lisa T is offline Senior Member
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    Default Re: Year End, Doubtful Accounts, Accounts Receivable, etc.

    are you on a cash basis or accrual basis?

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    BobInIndy is offline Senior Member
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    Default Re: Year End, Doubtful Accounts, Accounts Receivable, etc.

    Hi,
    It would be rare for a storage facility to be using the accrual technique for keeping books.
    That would imply that you record income whenever rent is due and then show losses when rent isn't collected.
    Using the cash basis, you monitor the actual cash (checks, ccs, etc) that you receive and also record the bills that you paid. Remember, it's when you pay the bill, not when you incur the charge.
    So things like late fees, aren't considered until you actually receive the cash.
    However, you should be aware that the Section 179 deduction is due for some significant changes at the end of 2012. That Section allows you to expense purchases made for some major items up to a very high limit.
    Unfortuanately, unless Congress does something quickly, the maximum deduction will drop to $25,000 for 2013.
    So buying that new truck maybe something to consider before the year's end.
    The accounts receivable can be used to anticipate how much income is still out there to be collected, but we both know that some of that potential will not be realized.
    It's not included as part of the income from the site.
    When a property is being appraised, the accounts receivable will be considered in the net worth, since a new owner would inherit some of those potential payments.
    Hope this helps
    storage-gal likes this.

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    Lisa T's Avatar
    Lisa T is offline Senior Member
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    Default Re: Year End, Doubtful Accounts, Accounts Receivable, etc.

    Bob the last company I worked for had 96 facilities, and they were on accrual, not cash. I don't know which is used more in this industry. On the accrual basis, when you took a payment for a year in advance, only the current month showed up on your income statement, the rest of the payment showed up each month as the month arrived. On the cash basis, you get credit for the entire year's payment in one month, and no income on that unit for all subsequent months.

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    BobInIndy is offline Senior Member
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    Default Re: Year End, Doubtful Accounts, Accounts Receivable, etc.

    Hi,
    Perhaps the reason for using the Accrual is in what you stated...96 facilities....
    "There are four types of taxpayers that cannot use the cash basis: (1) corporations with over $5,000,000 in gross receipts; (2) partnerships with at least one C corporation partner; (3) tax shelters;[7] and (4) taxpayers required to keep inventory (retail, wholesale, manufacturer etc...)"

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    MZC&D is offline Senior Member
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    Default Re: Year End, Doubtful Accounts, Accounts Receivable, etc.

    We do some things on Cash basis and some things on Accrual bassis. The best advice I can give is use an accountant. Once our accountant has been through all of our reports that you CAN print from sitelink, he knows which one's he wants and we simply send him whatever he wants, we let him worry about the best way to do things, that is his job afterall. Good luck!

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    Lisa T's Avatar
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    Default Re: Year End, Doubtful Accounts, Accounts Receivable, etc.

    actually you have to pick one or the other, cash or accrual...you can't do both. You might want to check with your accountant to see what's going on.

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    Lisa T's Avatar
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    Default Re: Year End, Doubtful Accounts, Accounts Receivable, etc.

    From the IRS website:



    Change in Accounting Method


    Once you have set up your accounting method, you must generally get IRS approval before you can change to another method. A change in your accounting method includes a change in:

    1.
    Your overall method, such as from cash to an accrual method, and

    2.
    Your treatment of any material item.


    To get approval, you must file Form 3115, Application for Change in Accounting Method. You can get IRS approval to change an accounting method under either the automatic change procedures or the advance consent request procedures. You may have to pay a user fee. For more information, see the form instructions.

 

 
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