Accounting entries for online sales made on ebay/amazon etc


Director

Hi,

We are dealing in Computer components &  doing online selling via Ebay/Amazon/Snapdeal etc.  In this sale there are 3 parties involved. 

1st  Step : The customer places order to Ebay & makes payment to Ebay.  2nd  Step : We Invoice to customer & send the goods at his place.  3rd Step : Ebay sends us payment after deducting commission & other fees. 

We are using Tally ERP 9 for our accounting work.  Currently we are creating new customer Ledger & Debiting his Account while making Invoice.  When receiving payment from ebay we directly credit customer Account & difference in payment is debited to Ebay Service charges.

Now since all  the sales are to Retail customers, the number of Ledgers in tally has increased very much & it is becoming difficult to manage.  Hence is it OK to modify the accounting entries as follows :

1) Raise bill in the name of  Ebay &  mention customer name/address as Consignee.

2) At the time of payment,  Credit the payment to Ebay .

This method of accounting also seems logical as the order is given by ebay to deliver the goods to particular customer & payment is also done by ebay. Hence we should show sales made to ebay & not to customer.

Please give your expert advice .

Regards,

Ravi Modi

 

 

 

 
Reply   
 
CA Final Student

Dear Ravi,

I believe u cannot do so because Ebay is the consignee and not the customer...Ebay acts as ur agent and charges commission.

 
Reply   
 
Director

Hi Sumit,

But as per definition  consingee is one who receives the goods ( the customer).  I am receiving order & payment from ebay.  So ideally bill should be generated in the name of ebay.

 

 
Reply   
 
Student CA Final

Hello Mr. Ravi,

Customer can never be your consignee.

 

 
Reply   
 
Director

In Tally there are two options while preparing Invoice.  1) Buyer Name & Address 2) Consignee/Delivery Name & Address.   The ledger is created in the name of Buyer & his account is debited, wheres Consinee Name & address is only for record .

I want to Enter Ebay as Buyer Name,  & End Users Name as Consignee Name,

Is this correct Entry.

Ravi

 

 

 

 
Reply   
 

 
Reply   
 
CA Final Student

Dear Ravi,

No the entry is not correct as u r not selling ur goods to ebay, u are selling it to end customer...Regarding payment u receive, it is paid by customer to ebay and ebay after deducting commission pays to u...So indirectly (or thru ebay) customer purchases from u and also makes payment to u thru ebay...Ebay in the whole transaction acts just as ur agent...

I beleive u have to open customer account each time u make a sale

 
Reply   
 

Dear Ravi

you can follow this practice which you have mentioned above. The customers may be thousand and in lacs, but you only know the Ebay or snapdeal. They are giving you a business hub where they are promoting your products, and also customers have a  faith with the brand- Ebay or snapdeal.

so you must invoice to Ebay as billing party and mention the complete customer detail in Consignee/Shipping party column, as you are receiving all the payments from Ebay after deduction of commission. so this is correct method. 

 

 

 
Reply   
 
CA Final Student

Dear Sunil,

If I am selling my products through an agent, I can invoice all the sales in the name of the aget?

 
Reply   
 

The differance amout what we are saying Commission / Brokerage  to ebay.. TDS will attract.. here we don't have chance .. total money controll having ebay..

So.. i agree with Sunil   

 
Reply   
 

LEAVE A REPLY

Your are not logged in . Please login to post replies

Click here to Login / Register  

 


×

  CCI MENU