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    amporta's Avatar
    amporta Posts: 2, Reputation: 1
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    #1

    Mar 13, 2007, 09:22 AM
    Proper recording of income
    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's Avatar
    Smith21000 Posts: 69, Reputation: 9
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    #2

    Mar 13, 2007, 12:35 PM
    How did you originally record the posting of the invoice you paid for the other company?
    amporta's Avatar
    amporta Posts: 2, Reputation: 1
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    #3

    Mar 13, 2007, 01:26 PM
    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's Avatar
    Smith21000 Posts: 69, Reputation: 9
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    #4

    Mar 13, 2007, 01:44 PM
    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 probably be classified as a advance, overall assets, liabilities and equity are all still properly stated. Let me know if this solves the issue.
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