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BK-CPA, Certified Public Accountant (CPA)
Category: Financial Software
Satisfied Customers: 933
Experience:  CPA, experience with multiple accounting software packages
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I work business that does consignment and auction sales. I

Customer Question

I work for a business that does consignment and auction sales. I have quickbooks premier and I want to double check that I am doing the set up right for the income.
Currently what I am doing is the owner deposits all sales (including business fees and taxes) into the trust account for consignment funds. Once the consigners have been paid I transfer out into the business checking account the fees and taxes. When the income is deposited I label it merchandise sales, when i "pay" the fees and taxes I mark them an expense. However it feels like I am doing it wrong. I am very new and have some accounting education, but my supervisor knows less about accounting than I do. Because the fees should technically be income. those are fees that we keep. Taxes of course we pay online.
Submitted: 6 months ago.
Category: Financial Software
Expert:  BK-CPA replied 6 months ago.

Hello and thank you for your question.

From what I can tell you are selling the products that you are holding on a consignment basis for others.

When you collect the money from the sales, you would (total debits = total credits):

Debit cash

Credit commission income for the fees you get to keep

Credit sales tax liability for the sales tax due

Credit a liability account for the amount due to the actual seller

When you pay the sales tax:

Credit cash

Debit sales tax liability

When you pay the actual seller their proceeds, less your fees:

Credit cash

Debit liability to actual seller

Notice how there was really no expense to record in all of that.

I hope this was helpful.

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