Accounts for special orders

[Maf. King]

On Tue 5 February 13 07:22:30 Admin wrote:
> I've not been able to find an answer in the archives on this, so I'm
> hoping someone here can point me in the right direction.
> 
> The topic is "special orders".  I have a small business.  Customer Alice
> wants me to order a SuperWidget.  The price is to be $500, and she's
> given me $250 earnest money.
> 
> Vendor Bob is currently out of SuperWidgets, but has them on backorder.
> Current cost is $400; I will not be billed until the item ships.  Should
> Bob be unable to obtain a SuperWidget for me, then the whole deal is off
> and Alice will receive a full refund.
> 
> So . . . how to enter all these.  I can start an Invoice for Alice's
> SuperWidget order, but Income:Expenses doesn't seem to be the right
> offset -- it's more of an escrow.  How do I set up accounts to show the
> order and then the subsequent transactions as the order gets filled?
> 
> Any help and suggestions would be appreciated.  Thanks much!
> 

Hi,

Firstly, you may need to seek professional accountancy advice for this, local 
laws may dictate that you handle this in a certain way.

If it were me (in the UK), I would go ahead and raise an invoice to Alice.  
Your choice if you raise one or two.  I'd record the sale as something like 
Income:Sales.  (I'd also have a VAT split to VAT:Output, but let's ignore 
sales taxes for now).

I'd then process the partial payment from Alice into my bank account.

I'd then wait for the SuperWidget to arrive, and get in touch with Bob if it 
was taking too long....

Assuming the SuperWidget arrives OK, I'd send it on to alice and expect to 
process the second payment as normal.

When Bill sent his bill, I'd record that to Expenses:Resale_items ( or COGS, 
Cost Of Goods Sold), and process payment to bob from the bank.

If Alice gave up on Bob, and cancelled the order, I'd refund her from the 
Bank, with a transfer from Income:Sales, and I'd amend the invoice to just the 
partial payment total, with a note about cancelled orders.  I'd then probably 
also delete her original payment and re-process it, just to ensure that the GC 
internal logic doesn't get confused about which bills are and are not paid.

HTH,
Maf.