I have paid and invoice for another company (advanced) and in turn invoiced the that company the invoce total plus 5%. How should I report both sides of the transaction? In reality the only actual received income is the 5%.

Smith21000

How did you originally record the posting of the invoice you paid for the other company?

amporta

I haven't yet, since it was a wire transfer I need to do a journal entry for the wire. I know I will cr cash, should the other half be a dr to an accounts receivable account?

Smith21000

If you paid a bill for this company in the amount of 100.00 and then you want to charge them a 5% service fee, the best way to record this entry is as followed:

(dr)A/R 105
(cr) Cash 100
(cr) Service Fee Income 5

Relaize thou this should be handled differently if you are to present financial statements. If your talking about big dollars it should probally be classified as a advance, overall assets, liabilities and equity are all still properly stated. Let me know if this solves the issue.