How to record transactions with PayPal fees?

[Buddha Buck]

I have the situation where I may receive payments in either cash/check or
via PayPal, so I have to deal with this situation often.  Mostly I invoice
membership dues for my organization, so that's what I'll use as an example.
 One of our common membership levels is $20, which I'll also use as an
example.  The transaction fee for $20 is $0.88.

My solution is to create an invoice for $20 monthly dues that makes no
reference to the method of payment (as I often times don't know it yet),
and post that.  That gives me the proper income in my Income:Dues account,
as well as a matching entry in my Assets:A/R account.

When I receive a $20 payment from PayPal, I go to
Business->Customer->Process Payment, select the customer, and put in a
payment of $20.

At this point, there are two relevant transactions:

1. Invoice $20 membership dues
--Debit Assets:A/R $20
--Credit Income:Dues $20

2. Payment of $20
-- Debit Assets:PayPal $20
-- Credit Assets:A/R $20

I then go to the Assets:PayPal register, find the line for Transaction 2
above, and edit it, making it a split transaction.  I leave the Assets:A/R
line alone, but modify the Assets:PayPal line to be $19.12, which
automatically creates a split for $0.88 cents when I tab out of the Debit
field.  Moving to that new split, I set the account to Expense:Bank Service
Charges, so finally the transaction looks like:

2. Payment of $20
-- Debit Assets:PayPal $19.12
-- Credit Assets:A/R $20
-- Debit Expenses:Bank Service Charges $0.88

When I receive funds via PayPal for a non-invoiced reason, I just record it
as a split transaction, with the gross amount paid credited to some income
account, and the net amount received debited to the paypal account and the
fees debited to the bank charges expense account.


On Mon, Jul 8, 2013 at 8:58 AM, David McReynolds <david.mcreynolds at gmail.com
> wrote:

> Probably been asked 1000 times. I would search the archives, but when I
> click that link the page is totally jacked up.
>
> I'm selling an item let say for $10.00 on ebay and when the buyer pays the
> $10.00 paypal takes $0.65.
>
> I was creating an invoice for the sold item, $10.00. I'd like to use split
> transactions to keep all the related transactions together, but I'm running
> around in circles and I cannot get things to balance.
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