Need clarification on Accounting and invoicing

Hello Experts,

Need a clarification on revenue calculation and invoicing in an online model. The model is as below:

A - The person who wants to sell the product by utilizing online platform of "B"

B - The intermediary who owns the online platform and earns commission from "C" who is the buyer of product

C - Buyer of product

The product will not come into possession of "B" as "B" is only facilitating the sale via online platform. How is the revenue for "B" calculated ? The invoice to "C" is it Product Price + Commission or just commission ?

Hoping for some clarification

Replies (2)
Quick Summary
This discussion seeks clarification on accounting and invoicing practices for an online sales model. It explores how an intermediary (B), who facilitates sales between a seller (A) and a buyer (C) without taking possession of the product, should calculate its revenue. The core questions revolve around whether the invoice to the buyer includes the product price plus commission, or just the commission, and how revenue is recognised when the intermediary adds a margin.

Product cost 100₹, Commission 10₹. The revenue recognition model is slightly different here because, if A was the principal, he will sell the products directly to customer. But, A is using Agent B to make a sale and not paying commission. So the transaction price A sets is different from what B sets. Considering this, A is a wholesaler who sells at his own price and B add a margin and sells the product. Or A sets a margin on behalf of B.

In the books of A:

Cash a/c 100₹

To B a/c 100₹

In the books of B:

Commission received a/c 10₹

Cash a/c 100₹

Sales a/c 110

then he transfers the cash to A’s a/c

A a/c 100

To Bank a/c 100

In the books of C:

Purchases a/c 100₹

Commission a/c 10₹

To Cash a/c 110₹

Thank you so much for the clarification

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