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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 4543
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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With a cash basis publishing business where my distributor

Resolved Question:

With a cash basis publishing business where my distributor sells books and collects 90 days later, do I show the income once my distributor has paid me? And do I show the inventory sold as an expense once it leaves his warehouse? And where he collects an amount per book and then only remits 75% to me, do I show the total amount and show the 25% as being paid to my distributor as an expense, or do I only show the 75% that comes to me?
Submitted: 5 years ago.
Category: Finance
Expert:  Rakhi Vasavada replied 5 years ago.

Dear Friend,


YES.. from what I gather from your question, you have to show the income once your distributor pays you. The inventory sold is showed as expense once it leaves your warehouse. Also, you will have to show entire 100% as income out of which 75% would be received and 25% would be expensed.


Hope this helps...

Warm Regards,

Customer: replied 5 years ago.

So, just to clarify, even though my distributor will only pay me 75% of the money (which I will receive) and he will take out 25% (which I will never see), with a cash basis system, I will still need to show the 25% I never see?

Example: I am paid $75. I know that the distributor took $25. My bank account will only show the $75. On my books I will show that I made $100 and paid $25. Is that how it works? And then the same concept with online credit card processing (paypal), where I never get the percentage they take.

Also, with inventory, I'll be expensing inventory on sales long before recognizing the income. Is that what they expect to see with a cash basis system?

Expert:  Rakhi Vasavada replied 5 years ago.

Dear Friend,

YES.. you will need to show and after showing , you will immediately debit it in the same entry.


Warm Regards,

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