Example of a Prepaid

This example shows the accounting implications of a 100,000.00 USD prepaid and the utilization against it. Column headings are abbreviated. Full spellings are billed accounts receivable (Billed AR), contract liability , and Contract Asset.

Steps	Billed AR	Contract Liability	Contract Asset	Revenue
Initial prepayment is billed. PeopleSoft Billing creates the entries in the columns to the right:	100,000.00	(100,000.00)	-	-
20,000.00 USD of billable transactions sent to PeopleSoft Billing. PeopleSoft Billing creates the entries in the columns to the right:	20,000	-	(20,000.00)	-
20,000.00 USD of billable transactions are utilized. PeopleSoft Billing creates the entries in the columns to the right:	(20,000.00)	-	20,000.00	-
The Contract-to-GL process sends billable transactions to PeopleSoft General Ledger. PeopleSoft Contracts creates the entries in the columns to the right:	-	-	20,000.00	(20,000.00)
The Contract-to-GL process sends utilization rows to PeopleSoft General Ledger. PeopleSoft Contracts creates the entries in the columns to the right:	-	20,000.00	(20,000.00)	-
81,000.00 USD of billable transactions are sent to PeopleSoft Billing. PeopleSoft Billing creates the entries in the columns to the right:	81,000.00	-	(81,000.00)	-
80,000.00 USD of billable transactions are utilized. (1,000.00 USD cannot be utilized because prepaid balance is fully decremented.) PeopleSoft Billing creates the entries in the columns to the right:	(80,000.00)	-	80,000.00	-
The Contract-to-GL process sends billable transactions to PeopleSoft General Ledger. PeopleSoft Contracts creates the entries in the columns to the right:	-	-	81,000.00	(81,000.00)
The Contract-to-GL process sends utilization rows to PeopleSoft General Ledger. PeopleSoft Contracts creates the entries in the columns to the right:	-	80,000.00	(80,000.00)	-
Totals	101,000.00 awaiting cash collection	0	0	(101,000.00)