25 February 2008
a firm[say a] has taken a frenchise of a product from a firm[say b], firm-a accepts only credit card payments, the amount of sale(credit card sale) is send to firm-b. later firm-b will pay some amount to firm-a as per their contract. how will the credit card payments be recorded in books of firm-a. Also some bank charges are deducted for this facility by the bank. please give me entries to be passed in this case.
26 February 2008
firm-a purchases goods from firm-b but no payment is done, when their goods are sold sales amount is send to firm-b, then firm-b sends back some %of the profit to firm-a. this is as per their contract.the clint(firm-a) told us that credit card sales amount is send to firm-b.
26 February 2008
Please clarify how you are accounting purchases and sales. Pattern of billing both purchase and sales. While sending goods, how your firm-b is billind? Is is in firm-a name? While selling whether firm-a is using its name? If the answer is yes, then firm-b is creditor of firm-a and entries are to be passed accordingly. If the answer is no, then firm-a is acting is on behalf of firm-b, all the stocks belongs to firm-b and firm-a is receiving commission for the same. I think later is position of firm-a. Create a ledger account in the name of firm-b, enter all the transactions whether purchase or sales. Regarding amount received, treat the same as commission received.
1. Purchase from B Purchases a/c Dr To B 2. Sales by credit Card Bank a/c (EDC-swiping machine provider)Dr To sales 3. Payment to B B a/c Dr To Bank a/c 4. Commission payment by B to A Bank a/c Dr To Commission earned
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