[GNC] How to Reclassify Invoice Amounts

Adrien Monteleone adrien.monteleone at lusfiber.net
Sat Dec 8 13:45:42 EST 2018


You should really speak to a local CPA to get a clear direction and picture of how you need to handle the various issues particular to your jurisdiction.

Revenue and expenses should not be in the same transaction and expenses should certainly not be on an invoice except in rare cases where you pass them on directly with the customer’s knowledge that you do so. (freight and other logistical expenses are sometimes directly invoiced)

The revenue sharing would likely be handled as a pass-through similar to sales taxes. You’ll book a transaction to something like a ‘revenue sharing due’ liability account. But unlike sales taxes, it should be handled separately and should not appear on the invoice. It might instead be handled like a dividend payment.

PayPal is just an expense. You can book it each time, or from a monthly statement similar to how you would record merchant fees for credit card receipts.

The insurance amount is an expense and should be booked when you ‘use’ it. Many insurances are usually pre-paid, booked as assets and then expensed when they are ‘used’. Adjust for your case as needed.

The remainder is just left over after everything else. You generally don’t record it separately. (unless you book Retained Earnings periodically) You discover what it is via an Income Statement. (P&L report)


Your invoice should result in:

Dr. Assets:Current Assets:Accounts Receivable	$225.65
Cr. Revenue:Sales 					$225.65


The receipt of payment would be:

Dr. Assets:Current Assets:Checking		$225.65
Cr. Assets:Current Assets:Accounts Receivable		$225.65


Then you’ll create something similar to each of the following:

Dr. Expenses:Bank Fees				$3.90
Cr. Assets:Current Assets:Checking			$3.90

Dr. Expenses:Insurance				$192.15
Cr. Assets:Current Assets:Checking			$192.15

or

Dr. Expenses:Insurance				$192.15
Cr. Assets:Current Assets:Pre-paid:Insurance		$192.15

Dr. Revenue:Sales				$13.73
Cr. Liabilities:Revenue-Sharing Due			$13.73

When you actually pay your revenue-sharing partner:

Dr. Liabilities:Revenue-Sharing Due
Cr. Assets:Current Assets:Checking

Regards,
Adrien

> On Dec 8, 2018, at 10:40 AM, tbalaban <tbalabanjr at gmail.com> wrote:
> 
> I run a service organization that contracts with others on per item basis.
> Therefore the amount I invoice is much greater than the amount we retain. 
> 
> How do I reclassify the amount invoiced so that the various expenses related
> to the transaction are booked but not shown on the invoice?
> 
> E.G., a service fee is $3.65 for 61 units or $225.65. Of this 1.75% may go
> to PayPal, $192.15 will go to our insurance company, 13.73 will go to a
> revenue-sharing partner leaving $15.82.
> 
> Before I started keeping track of sales by invoice I would just splt the
> transaction. Bow that I'm using the A/R part of the system, can I do the
> same thing but have the customer only see the amount due and not the
> underlying splits?
> 
> Many thanks for any guidance you can provide.
> 
> 
> 
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