| On a second look, I don't seem to understand the flow of your accounting entries: Booking date (I understand that on that day, the booking is confirmed, but the guest's payment method has not yet been charged) Dt Receivables from guests 100
Cr Future host payout 90 (Problematic: how can you pre-recognise a liability on your balance sheet? Unless this is an off-balance sheet account...)
Cr Deferred income 10 (Problematic: deferred revenue arises when you receive a pre-payment from customers and have a standing obligation to them to render the services)
Payment made by guest Dt Cash 100
Cr Receivable 100
Check-in date Dt Deferred revenue 10
Dt ??? ??? (seems to be missing to balance the double-entry)
Cr Payable 90
To me, the natural way to do this would be:Booking date - no accounting entries, no effect on books. You did not render a service to the customer yet, nor fulfil or incur any obligations yet. Payment received from guest - you received a prepayment for future services to be rendered, so now have a liability to the customer to fulfil this obligation, i.e., deferred revenue. Dr Cash 100
Cr Deferred revenue 10
Cr Payables to host 90 (unsure about this one, as this goes into the whole gross vs. net revenue recognition discussion for marketplace-type businesses)
Day after check-in - recognising the revenue on one single day might work now, but it's only a makeshift solution - what if your customer stays for a longer period of time, or between two accounting periods, and this becomes material? By definition, you recognise revenues proportionally, but I get that the cost vs. benefit of doing this now might be unfavourable. Dr Deferred revenue 10
Cr Revenue 10
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